Bankruptcy, Eviction, and an Understanding of Debt

June 9, 2010 - PRLog -- Many people who file a Chapter 13 Bankruptcy case do so to protect their homestead, but there is also relief for those who are in fear of being evicted.

A Bankruptcy case can help those who have fallen behind on their rental payments and are in jeopardy of being put out on the street. Many landlords are unaware that when a Chapter 13 bankruptcy is filed, they can no longer proceed with the eviction process and are stopped from filing an eviction proceeding, continuing with an eviction proceeding, or in some circumstances, even if the eviction proceeding has been completed, putting a person out on the street.

By filing a Chapter 13 Bankruptcy case, the client can attempt to place missed rent payments through their plan of reorganizationn upon agreement with the creditor. However, the client must become current with any rent payments missed after the filing date in order to continue to be protected and prevent the eviction.

Although this is an effective means of stopping an eviction, the guidelines are much more stringent than when one is trying to stop a foreclosure on his or her home. The main reason for this is that a lease is periodic, leading to the presumption that the renter can and will leave the residence at some point in time, breaking the lease if he or she chooses too; putting the creditor in a bad position, because his claim (money owed) is not protected as a mortgage company would be throughout the duration of the Chapter 13 Plan of reorganization.

However, it goes to show the power that the Bankruptcy laws have and the weight that they carry.

Many people who go through the process of bankruptcy are confused about what is secured, unsecured and priority debt.

Secured debt is any debt that a creditor can take away from you, such as a house, a car, or even miscellaneous household goods one must sometimes put up for collateral in order to secure a loan. This type of debt is a debt that you must pay in order to keep the items that you want. If you are going through bankruptcy and have put up collateral to get a loan, like the miscellaneous household goods, then there is a process we would go through to void that lien. The reason for this is that, in bankruptcy, your household goods are protected by exemptions. Therefore, this type of debt does not have to be paid back.

Priority debt is any debt owed to the IRS or for child support. These types of debts have to be paid back and are generally paid through a chapter 13 at a zero percent interest rate. Under a Chapter 7 bankruptcy, this type of debt is not dischargeable, and one must still pay it off after discharge.

Unsecured debt is debt in the form of credit cards, utility bills, and medical bills. These are intangible things that can not be physically taken from you.

I feel that it is very important that clients understand the difference between all three of these, so that they may have a more thorough understanding of the process.

For more information visit http://www.bankrupcy-alternative.com/questions.html or call us directly.

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