Since the New Bankruptcy Law was amended, the application process has become more complex.
Once you have filed for bankruptcy, the court shall be the one to decide whether you qualify for Chapter 7 bankruptcy or a Chapter 13 bankruptcy.
Only the Chapter 7 bankruptcy will release you from all your repayment obligations while a Chapter 13 bankruptcy will place you under a mandatory repayment plan which can last for 5 years. During the mandatory repayment period, the bankruptcy court will declare a percentage of your monthly salary to be automatically deducted and given to your creditors.
Getting Out Through Home Equity
Clearly, filing bankruptcy doesn’t always guarantee that you will be free from debt repayment. If the court finds that you are still capable of repayment, you will be obliged to do so. If you have been subjected to a Chapter 13 Bankruptcy, what can you do to recover from bankruptcy more easily?
On option is to use your home equity to pay your outstanding balances. By applying for a home equity loan, you can use the money to get out of debt repayment much sooner. Furthermore, acquiring a home equity loan can help you rebuild your credit history immediately after bankruptcy. Ask your bankruptcy attorney about this option and see if he suggests this considering your financial situation.
No Need to File for Bankruptcy
Instead of filing for bankruptcy, you can also consider obtaining a home equity loan to pay off your debts. Take note that before submitting your bankruptcy application, you are required to go through credit counseling. A credit counseling agency should be able to give you proper advice as to which solution is best for you.
By borrowing against your home equity, you can be sure that you can submit your payments on time. A home equity loan can be taken out in installments so you can obtain the funds you need to pay your monthly bills.
Bear in mind that just like a standard home loan, a home equity loan uses your home as collateral for your debts. When your home equity loan repayment period starts, you should be able to keep up to avoid losing your property.
Using a realistic repayment plan, acquiring a home equity loan can be an efficient solution to debt problems. The great thing about it is that it will not erase all the credit history you built in the past. On the contrary, you can use it to rebuild your bad credit.
