Bankruptcy Overview
For individuals, bankruptcy can mean either liquidating or reorganizing debt. Liquidation, also referred to as a Chapter 7 bankruptcy, provides debt relief for individuals as well as the option of protection for many assets. Reorganization, generally falling under Chapter 13 for individuals, offers a means to reorganize debt and to save assets. A further explanation is below.
Chapter 7 Bankruptcy
Chapter 7, in brief, is what most people think of when they think of bankruptcy. It provides relatively quick relief from debt and provides an opportunity to either keep or dispose of assets in such a way that is tailored to their personal finances. It can be used for either individuals or for businesses. While a fairly common practice there can be some pitfalls. A further explanation is provided below.
Chapter 13
Chapter 13 bankruptcy is a bit more complicated of a process that permits reorganization of debt. One of the more common uses of Chapter 13 bankruptcy is for the preservation of real estate interests against the liens of banks. In recent years, and following the economic downturn in 2009 many of the bankruptcy courts, including the Middle District of Florida, have instituted mortgage modification programs in order to help people preserve their home.
Second Mortgages
In many cases the primary mortgage on a home may be modified or caught up through the bankruptcy plan. Second mortgages may, in many cases be taken off or “stripped” off of the home leaving you without liability or a threat of foreclosure. Determination as to whether this is possible will require a calculation involving your loan amount and whether there is equity in your home. Contact us today in order to determine your options.