Many people with bankruptcy cases are hesitant of revealing the reasons why they filed for bankruptcy. This is understandable because being unable to honor obligations to creditors, suppliers and government is not only embarrassing but also a big legal nightmare. However, below are few reasons why individuals and companies file for bankruptcy with the help of Houston bankruptcy lawyers.
Peace of Mind
There is nothing as annoying as the incessant calls you receive from the creditors enquiring how long they should wait for their check while you know the check will not be written. A Houston bankruptcy protection helps you stop the creditors in their tracks and gives you a much needed breather. This peace of mind is important because it helps you think of creative ways you can use to generate the much needed income that will help settle your debts.
Stop Asset Collection by the Creditors
When getting a secured loan, you probably must have listed a certain asset as collateral. In cases of default, the creditors usually liquidate the asset to recover their money. When under bankruptcy protection, your personal assets will not be auctioned off. Rather, a trustee will be appointed to be the temporary owner of your assets and will then evaluate all the non-exempt property. This nonexempt property will be used to pay off the secured loans first and then will be divided equitably to pay off the unsecured creditors.
Retain your Credit Rating
An individual or business that commits to pay their creditors under renegotiated terms and duration is much likely to keep a good credit rating. A Houston bankruptcy court will ensure that you pay off your debts and if unable to pay in the agreed duration, the court may authorize the trustee to liquidate your property and pay off the debts.
Keep the exempt property
You probably cannot survive without basic needs such as a house, a simple car, clothing etc. A Houston bankruptcy court will help you keep this personal property if you have filed a bankruptcy case with them. Note that without the protection, the creditors and their collectors will not mind leaving you on the street with nothing. The trustee appointed by the court on the other hand will identify all the basic things you need for survival before liquidating all the nonexempt property.
Renegotiating the payment terms
Sometimes a business may be unable to honor its obligations to the creditors in the period agreed. It thus will require bankruptcy protection in order to have an additional time within which it must honor its obligations. This usually happens when a business is facing cash flow problems but expects that this problem will be short lived due to expected incomes. Although this is usually not a very good ground to file for bankruptcy protection, a good Houston bankruptcy lawyer should be able to make a case that can stand the very thorough scrutiny that is visited on all the bankruptcy filings to verify that the business thereof merits the protection.
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