When a person decides that the bankruptcy filing is in his future, she will usually consult a bankruptcy lawyer to find out what she may encounter. As financial markets become more complex, people become bankrupt. Again, this is a good reason to be represented by an experienced bankruptcy lawyer who has filed numerous petitions. The lawyer will know the ins and outs of the bankruptcy code as well as state bankruptcy laws for the area in which the person files.
Nowadays, many people are trying to mix their banking transactions with their credit accounts, their mortgage loan and even possibly a car loan. This is where a person who declares bankruptcy can discover something that was simple and that she thought to be released will not be because it is now secured by real estate. How can this happen? It's quite simple, when you buy a house or a car, the bank or the lender asks an individual to sign a document giving him a security right on the house or the car. In other words, the property becomes a debt security and if the person does not pay, the lender has the ability to repossess or prevent the property in question. This is very common and just about everyone knows that if they do not pay, they will lose it.
Recently, credit unions and some banks have included in their contracts a provision allowing them to attach any other financial institution property or money to the vehicle or house. It is something that people do not realize before declaring bankruptcy. This becomes even more complicated when the person pulls out a credit card at the same place. Now the person has created a secured debt for the credit card that she has just withdrawn.
Most people filing for bankruptcy file chapter 7 because of the bankruptcy of all unsecured debts. Nobody discovers it until the bankruptcy lawyer files a bankruptcy petition with the court. All creditors are informed and all of a sudden, the lawyer discovers that the cross guarantee is an agreement between his client and his bank or bank. Now, all the debts that are held there are secured debts and the only way to eliminate them is to return to them all the property held. The disadvantage is that if there is money in the bank, they could take it to pay the balance owed. This whole thing can become really sticky. Again, it is there that a bankrupt lawyer will make a living. They will be able to advise your client on the benefits of paying the debt in relation to the running of the car or any other property held as collateral. Before you declare bankruptcy, it is wise to do a little research on the debt and determine who holds the reins. And for people who do not need to declare bankruptcy now, they should consult their own financial institutions to make sure there is no cross-guarantee clause in their contract.