How Do Bankruptcies Affect A Joint Mortgage
If one person files for bankruptcy, that can have an impact if you both are on the mortgage. There are instances where one persons bankruptcy can cause issues with keeping the home, even if more than one of you is on the mortgage. In order to be fully apprised of what can happen, talk to your attorney.
Can I Be Made Bankrupt
The minimum level of debt for which someone who you owe money can force you into bankruptcy is £5,000.
The process of being made bankrupt is different.
But high street lenders rarely use this option and will prefer to work with you to find another way to pay off your debts.
You can find out more about what happens if someone tires to make you bankrupt on the GOV.UK website
Focus On The Cause Of Your Debts
, but it is far from the complete solution.
If you want to get rid of your debt problems, you must focus on the cause.
Learn how to manage your finances and be a responsible borrower.
Budget your money and stay on top of your essential payments.
All of this can help you pay off your debts and avoid future financial issues.
Its also worth checking out other debt-relief options like debt consolidation or debt restructuring before going straight to bankruptcy.
If you do , you still have to work on managing your money and addressing why you fell into a debt trap.
This stops you from making the same mistakes once youve been discharged.
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Stop A Foreclosure Repossession Or Eviction
The automatic stay will stop these actions as long as they’re still pending. Once complete, bankruptcy won’t help.
- Evictions. An eviction that’s still in the litigation process will come to a halt after a bankruptcy filing. But the stay will likely be temporary. Keep in mind that if your landlord already has an eviction judgment against you, bankruptcy won’t help in the majority of states. Learn more about evictions and the automatic stay.
- Foreclosure and repossession. Although the automatic stay will stop a foreclosure or repossession, filing for Chapter 7 won’t help you keep the property. If you can’t bring the account current, you’ll lose the house or car once the stay lifts. By contrast, Chapter 13 has a mechanism that will allow you to catch up on past payments so you can keep the asset. Find out more about bankruptcy’s automatic stay and foreclosure and car repossession and bankruptcy.
How Do I Declare Myself Bankrupt
Perhaps the first question that comes to mind when you face insolvency is how do I declare myself bankrupt? We understand the frustration of having to deal with creditors that threaten with legal action, and the fear of having your assets attached and sold at below-market value. You know that you will end up paying interest, sheriff, legal and storage fees, and auction commissions, in addition to the debt. It can be a never-ending cycle, but there is hope. If you are declared bankrupt, you wont have to go through the above.
First, however, read up on our website on your question of How do I declare myself bankrupt in South Africa? Next, assess whether your liabilities far exceed your income, whether you have enough assets to ensure the sale thereof will realise enough benefit to the creditors, and whether you have a monthly income. If you believe that you meet the above requirements make an appointment with our attorneys to confirm your insolvency.
They will review your financial statements, bank accounts, asset lists and the likes, which you provide. Thereafter and having confirmed that you qualify for sequestration, they will advise you regarding the process, requirements, risks, benefits, and disadvantages. They will also explain how the rehabilitation process works, and what the costs are regarding voluntary sequestration.
As to the rest of the process to declare yourself bankrupt in South Africa, it is as follows:
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What Happens To My Credit After Bankruptcy
Another common concern for people evaluating debt consolidation and other debt management options is that they will not be able to rebuild their credit in future if they file bankruptcy, or that they will need to wait for seven years to apply for new credit this is false.
Personal bankruptcy will be noted on your credit history report for six years following the date of your discharge. However, despite this notation, you can begin building your credit up and apply for credit at any point. It is quite common to be granted credit such as a new mortgage or vehicle financing within two-to-three years of exiting bankruptcy, and as little as one year after bankruptcy it is often possible to obtain a standard credit card at best rates.
You can learn more about steps you can take to rebuild your credit following a personal bankruptcy or Consumer Proposal in this short video.
Whats The Difference Between Chapter 7 And Chapter 13
If youre considering filing bankruptcy, you should understand the options that are out there. Chapters 7 and 13 bankruptcies are the most used alternatives for individuals.
Chapter 7 bankruptcy is also known as total bankruptcy. Its a wipeout of much of your outstanding debt. Also, it might force you to sell, or liquidate, some of your property in order to pay back some of the debt. Chapter 7 is also called straight or liquidation bankruptcy. Basically, this is the one that straight-up forgives your debts .
Chapter 13 bankruptcy is more like a repayment plan and less like a total wipeout. With Chapter 13, you file a plan with the bankruptcy court detailing how you will repay your creditors. Some debts will be paid in full, while others will be paid partially or not at all, depending on what you can afford. Chapter 7 = wipeout. Chapter 13 = plan.
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You May Make Surplus Income Payments
When you file for bankruptcy, you must do the following:
- disclose to the LIT information about all of your assets and liabilities
- advise the LIT of any property that was sold or transferred in the past few years
- surrender all your credit cards to the LIT
- attend the first meeting of creditors
- attend two counselling sessions
- advise the LIT in writing of any address changes
- if required, attend an examination at the Office of the Superintendent of Bankruptcy and
- assist the LIT as needed in administering your estate.
You may be required to make additional payments to your LIT for distribution to your creditors.
In addition to paying the LIT’s fees, you may be required to make additional payments to your LIT for distribution to your creditors. These are called surplus income payments.
Each month during the bankruptcy process, you must submit a copy of your pay stubs and proof of other income to the LIT. The LIT then calculates your surplus income.
Surplus income is the part of your earnings that exceeds the amount of income a family needs to maintain a reasonable standard of living. This amount is set by the OSB annually. The larger your family, the more you are allowed to keep the more you earn, the more you are required to contribute.
In other words, if your household income exceeds the level set by the OSB, then you must make additional payments to your LIT during your bankruptcy.
Consider Cancelling Your Contracts
After filing for bankruptcy, youll want to keep your outgoing to a minimum to help you learn to budget better and to be able to afford to live on what you have.
You should consider cancelling contracts for things like your cell phone before you file for bankruptcy, as the repayments could be included within your bankruptcy term.
If there are costs that you can no longer afford, or things are considered a luxury and not a necessity, you should consider cancelling them.
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Three Costs Of Bankruptcy
Base Contribution: Most trustees in Canada will require you to pay a base contribution each month that you are bankrupt. The average base contribution across Canada is approximately $200 per month, but it could be more or less, depending on your situation. For example, if you have a complicated situation, perhaps because you are self-employed, the base contribution may be higher.
All trustees in Canada are independent businesses they dont receive any funding from the government or your creditors, so the base contribution is necessary to cover their basic administrative costs.
Surplus Income: If your income is over the surplus income threshold set by the government, you are required to make a surplus income payment. Each month you are required to submit proof of your income to your trustee, and then your . If your income during the first seven months of your bankruptcy is more than $200 over the limit, per month, on average, your bankruptcy will be extended for an extra year. For a first time filer, if you have surplus income your bankruptcy is extended from nine months to 21 months, and you are required to make those surplus income payments for the entire 21 months.
Assets You Lose: The third significant cost in a bankruptcy is that you may lose some of your assets. For example:
What Only Chapter 13 Bankruptcy Can Do
Chapter 7 and 13 each offer unique solutions to debt problems. The two bankruptcy types work very differently. For instance, how quickly your debt will get wiped out will depend on the chapter you file:
- Chapter 7 bankruptcy. This chapter takes an average of three to four months to complete. Learn more about erasing your debt in Chapter 7 bankruptcy.
- Chapter 13 bankruptcy. If you file for Chapter 13 rather than Chapter 7, you’ll likely have to pay back some portion of your unsecured debts through a three- to five-year repayment plan. However, any unsecured debt balance that remains after completing your repayment plan will be discharged. Find out how to pay off or discharge your debts in Chapter 13 bankruptcy.
Chapter 7 is primarily for low-income filers, and therefore, it won’t help you keep property if you’re behind on payments. But, if you have enough income to pay at least something to creditors, then you’ll be able to take advantage of the additional benefits offered by Chapter 13.
Here are some of the things that Chapter 13 can do.
Stop a mortgage foreclosure. Filing for Chapter 13 bankruptcy will stop a foreclosure and force the lender to accept a plan that will allow you to make up the missed payments over time. To make this plan work, you must demonstrate that you have enough income to pay back payments and remain current on future payments. Learn more about your home and mortgage in Chapter 13 bankruptcy.
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What Happens To Your Credit Score After Filing Bankruptcy
Chapter 7 bankruptcy and Chapter 13 bankruptcy filings show up on your credit report. How long it shows up depends on which type of bankruptcy you file. Chapter 7 bankruptcy stays on your credit report for 10 years after the filing date. A completed Chapter 13 bankruptcy stays on your credit report for 7 years after the filing date, or 10 years if the case was not completed to discharge.
As a result, filing bankruptcy will initially lower your credit score. How much your credit score will drop depends on how high or low it was before bankruptcy. Generally, a decrease between 100 to 200 points can be expected.
The good news is that you can begin rebuilding your credit as soon as your bankruptcy discharge is entered. It’s possible to have a better score within 1â2 years of filing. The credit scores of most bankruptcy filers are already lower because of missed payments. After the court grants a discharge, most unsecured debts are erased. Credit scores improve because there are no more missed payments and discharged accounts show a zero balance.
After Chapter 7 and Chapter 13 bankruptcy is filed, you will get credit card offers in the mail. These offers can be for secured credit cards, sometimes called prepaid cards, which require a cash deposit. Or, offers can be for unsecured credit cards, but will likely have high interest rates or annual fees.
Should You File For Bankruptcy
The decision to file bankruptcy should be a financial one. If you cant pay your debts as they become due, you are insolvent, which means you are eligible to file bankruptcy.
For you, bankruptcy may mean
- an end to harassing creditor calls
- no need to visit one payday lender to pay off another
- the elimination of high-interest debt
- a reduction in your monthly debt payments
- peace of mind and a fresh financial start.
Bankruptcy is always an option of last resort, but if you have more debts than you can repay, it is worth exploring. Book a free consultation with a Licensed Insolvency Trustee to learn more about how bankruptcy works and how it may help you get out of debt.
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The Bankruptcy Filing Process
There are a number of legally required steps involved in filing for bankruptcy. Failing to complete them can result in the dismissal of your case.
Before filing for bankruptcy, individuals are required to complete a credit counseling session and obtain a certificate to file with their bankruptcy petition. The counselor should review your personal situation, offer advice on budgeting and debt management, and discuss alternatives to bankruptcy. You can find the names of government-approved credit counseling agencies in your area by calling the federal bankruptcy court closest to you or by visiting its website.
Filing for bankruptcy involves submitting a bankruptcy petition and financial statements showing your income, debts, and assets. You will also be required to submit a means test form, which determines whether your income is low enough for you to qualify for Chapter 7. If it isnt, you will have to file for Chapter 13 bankruptcy instead. You will also need to pay a filing fee, though it is sometimes waived if you can prove you cant afford it.
You can obtain the forms you need from the bankruptcy court. If you engage the services of a bankruptcy lawyer, which is usually a good idea, they should also be able to provide them.
Assuming the court decides in your favor, your debts will be discharged, in the case of Chapter 7. In Chapter 13, a repayment plan will be approved. Having debt discharged means that the creditor can no longer attempt to collect it from you.
Your Responsibilities When A Bankruptcy Order Is Made
You must:
- give the official receiver information on your finances
- give the official receiver a full list of your assets
- tell your trustee about any rise in income during your bankruptcy
- tell anyone who offers to loan you over £500 that youre bankrupt
- go to court to explain why you owe money if asked to do so
There are also things you cant do while bankrupt. These are called restrictions.
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Your Cra Debt Options
If you are having CRA debt issues, speaking with a licensed insolvency trustee to help review your options is the first step. They can see what the best solution is for you, which may include a consumer proposal or a bankruptcy. When successfully entering into either a bankruptcy or a consumer proposal, this stops any further actions against you by the CRA.
If you owe the CRA money, dealing with CRA tax debt should be your top priority. Not only can the agency use widespread collection actions, but it can also withhold GST and Child Tax credits or even remove money from your bank account leaving you out of luck when it comes to meeting other obligations like mortgage payments.
Dont delay if you find yourself in tax debt. There is a solution to all types of debt.
If you live in the GTA, book a free consultation with the caring professionals at David Sklar & Associates. We are here to help assist you in making the best decision for you.
A Quick History Of Bankruptcy
The term bankruptcy probably came from the Italian phrase banca rottawhich literally means broken benchbecause in medieval days, if a merchant couldnt pay their creditors, they could come break the merchants market stall .1
What about bankruptcy in America, specifically? Well, several different bankruptcy acts popped up during times of economic crisis before the Bankruptcy Act of 1898. This one said bankruptcy didnt require the creditors approval and stuck around until the Bankruptcy Reform Act of 1978which set the laws we follow today.
Now when you file for bankruptcy, no ones coming to smash your bench , but its still a painful experience.
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If You’re Overwhelmed By Your Debts Bankruptcy Is Just One Option
If you have large debts that you cant repay, are behind in your mortgage payments and in danger of foreclosure, are being harassed by bill collectorsor all of the abovedeclaring bankruptcy might be your answer. Or it might not be.
Bankruptcy can, in some cases, reduce or eliminate your debts, save your home and keep those bill collectors at bay, but it also has serious consequences, including long-term damage to your . That, in turn, can hamper your ability to borrow in the future, raise the rates you pay for insurance, and even make it difficult to get a job.
