Page 66 - Workbook1E

The debtor is not allowed to transfer property that’s been declared part of the estate subject to proceedings. Furthermore, certain pre-proceeding transfers of property, secured interests, and liens may be delayed or invalidated. Various provisions of the Bankruptcy Code also establish the priority of creditors’ interests. According to Cornell University’s law website, there are two basic types of bankruptcy:
(1) Chapter 7—LIQUIDATION
This is the most common type of bankruptcy and is used when your asset to income ratio is hopelessly out of balance. It involves the appointment of a trustee who collects the non-exempt property of the debtor, sells
it and distributes the proceeds to the creditors on a percentage-of-debt basis.
(2) Chapter 13—REORGANIZATION
This involves the rehabilitation of the debtor to allow him to use future earnings to pay off his creditors. A trustee is appointed to supervise
the assets of the debtor who is placed on a strict budget. Then the trustee collects money from him on a scheduled plan, and administers disbursements of payments to his creditors. Legally, all secured creditors and a majority of the unsecured creditors must accept this court- approved reorganization.
Remember your bankruptcy will remain on your record for 7 to 10 years. Because of the damaging impact on your credit rating, none of these bankruptcy options should be considered unless there is absolutely no other workable alternative.
Note: Unlike reduced settlements, after your bankruptcy’s settled, the debt is “forgiven”, and your creditors can no longer try to recover their losses from you.
Build Wealth with the Extra Money!
Becoming debt-free is an exciting reality, regardless of your current situation.
Debt elimination is an important key
to becoming financially fit. You’ll be in control of a basic area of your finances and life. Erik and Tracy were excited to realize by becoming debt-free 20 years sooner,
the $2,985 total monthly amount they
had been paying could then be invested monthly. At 5% annual compound interest
over 20 years they would earn $864,031 in interest for a total increased wealth of $1,217,279! Freedom from debt makes it much easier to build your family’s wealth and secure your financial future.
“There are a few things
in this life that equal the sensation o’ bein paid up.”
~ Kin Hubbard
62 Workbook 1: Building a Spending Plan that Works