Whenever a person plans to file for bankruptcy, he always thinks of consulting one of the bankruptcy attorneys to know and understand the intricacies involved in the process. Financial markets are getting more complex with years passing by, and people often run into unforeseen issues as they apply for bankruptcy. Again, this gives a good reason for people to get in touch with an attorney who has already filed enough number of petitions. The experienced attorneys know everything about various bankruptcy codes along with the bankruptcy laws of state in which the candidate is filing.
Links between Mortgages, Credit Cards, and Bank Accounts
Today, people often mix their bank transactions with mortgage, credit accounts and sometimes even auto loans. This is exactly where someone who is going to file bankruptcy can find something very simple, yet discover that some kind of property or other asset linked. In situations like this, you wonder about the reason behind something like this. The reason actually is extremely simple; whenever you purchase a car or a house, the lending bank makes you sign a document that secures the loan amount that they sanction. In other words, one of your properties act like a security for the amount you have taken, and if you fail to make repayments, the lending bank gets the power to foreclose or repossess your property. This is extremely common and almost everyone knows that if they don’t repay on time they would certainly lose their property.
More recently, some of the banks and credit unions have been including a provision in the contracts that allow them to add money or any other properties at the financial firm to the house or vehicle. This is something people don’t pay attention to, until they are all set to file their bankruptcy. The situation gets even more convoluted if the person chooses to take one of the credit cards from the very same place. This way, the person ends up creating a secured debt related to the credit card.
Filing for Bankruptcy under Chapter 7
Most of the people file for Chapter 7 bankruptcy due to bankruptcy discharge of unsecured debts. No one realizes about it, till the attorney goes ahead and files a petition for bankruptcy in court. The creditors receive the notification and out of the blue the attorney finds out different cross collateral loans that the client may have had, unknowingly, with the bank or credit union. Now at this point, all debts of a person become secured debts and the one and only choice to get rid of them is to give away the property. The biggest downside to this is if there is money in the bank then they would not hesitate from taking it away to clear out the balance payable to them. Therefore, before really filing for bankruptcy it’s extremely critical to ensure that there are no secured loans.
The Need for Experienced Attorneys
This entire situation can turn out to be extremely tricky. This is why hiring an experienced attorney to file for bankruptcy is extremely important. These attorneys clearly lay out the advantages and disadvantages of letting away the property as per the current market standards. This helps in making difficult choices with great ease.
Do Your Research
It is always advisable to do thorough research before filing for bankruptcy, and know all about debt and rein holders. The people who are preparing to file for bankruptcy should be extremely cautious, and avoid any kind of collateralization clauses they may come across, with their financial institutions. Once again, an experienced attorney will be able to help you out in the process, and ensure that you don’t end up losing whatever little is left with you.