Bankruptcy is referred to as a reorganization or liquidation process. All entities with debt can go to federal bankruptcy court. It’s not hard to qualify for debt elimination. You can pay off some of what you owe instead. An option for many is a liquidation of assets. This means assets not covered by exemption will be sold to pay down some debt. Chapter 7 lets you liquidate assets. A majority of people would rather reorganize their debt. With the condition that monthly payments will be made for 3 to 5 years a person can keep their property. Choosing this option will pay off debt or a portion of it. The most popular choice is a reorganization filed under a chapter 13 bankruptcy.
Chapter 7 bankruptcy
If you file for bankruptcy you are known as the debtor. If your debt is out of control an option for you could be a chapter 7 bankruptcy. All debts that get discharged will not have to be repaid. Secured debt held by a lien can’t be discharged by your bankruptcy. If you don’t want you property to be repossessed you must make payments to the lien holder. You will not be perused by creditors after a discharge. If your income is too low to pay back major debt you may want to consider filing chapter 7 bankruptcy.
Chapter 13 bankruptcy
For chapter 13 bankruptcy a debtor will file a payment plan with the federal courts to pay back some or all the debts that they owe, over a three to five year period. One benefit to a chapter 13 bankruptcy is you keep your car and home. Included are property with past due balances and equity that your exemption did not cover. You will be required to make monthly payments towards your secured debts and even pay extra to get caught up on past due obligations. You won’t lose your car or home if you chose to file a chapter 13 bankruptcy. You will be able to keep certain secured debt by making payments over time.
Is bankruptcy a onetime benefit?
You can apply for another chapter 7 after 6 years. File a chapter 13 once or a hundred times it’s up to you. Surprisingly chapter 7 only costs $ 200. For a chapter 13 bankruptcy you will pay a $ 155 filing fee and a $ 30 noticing fee. The fee will never change when a husband and wife file a petition together.
Will I be required to go to court?
You must attend a proceeding called a meeting of creditors or a 341 meeting. You will be joined by creditors and a bankruptcy trustee. This meeting will happen about 40 days from your filing. You will be asked some questions about your financial issues at this meet. Some creditors or trustees will file a motion or adversary action at this time. You may dispute your debts at this time. If additional hearings are required the federal courts will send you a notice to appear.
Will bankruptcy repair my credit?
Filing bankruptcy has little effect on those with horrible debt. Bankruptcy will give those who have a long history of debt a second chance. Proof of a bankruptcy will remain for 10 years. Bankruptcy may actually be better for some because after being in bad credit trouble for so long you will finally be eligible for new credit you once could not get. Lots of people just need a fresh start. A life time of bad debt stinks. Use this opportunity to manage money better. Being responsible with money is taught skill that many never learned. If you were not taught how to deal with financial matters as a child you may end up being irresponsible with money especially because your parent was never taught as well. It is awful to be in debt but the future can be bright next time around.
