Photo: eldib.wordpress.com
Bankruptcy is referred to as a reorganization or liquidation process. Bankruptcy takes place in a federal court, for people or businesses that need to eliminate debt. People want to qualify for total debt elimination. Other individuals want to pay back a portion of their debt. Many people choose to liquidate their property. None exempt items can be sold to pay a portion of your debt. Liquidation always falls under chapter 7 filing. Lots of people would reorganize their debt. Monthly payments can be made for 3 to 5 years allowing you to keep your property. Choose this option to pay off all or most your debt. Reorganization lies under chapter 13 filing and it is the most common type.
Chapter 7 bankruptcy
If you file for bankruptcy you are known as the debtor. You can release all personal liability for the debt you owe with a chapter 7 bankruptcy. Any debt that a debtor owes and is covered under your discharge will not need to be repaid. Sometimes people get stuck with property that is held out of discharge by a valid lien. In a lien case the debtor is still liable to pay the specific debt to the secured creditor, or be forced to release the property to the lien holder. Debts included in a discharge cannot be perused by creditors. Consumers who have way too much debt that cannot be repaid are good candidates for 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. The best part of a chapter 13 bankruptcy is you can keep your car and home. This will include assets that are past due or even equity that is not covered by your exemptions. You will have to make payments towards secured debt to get caught up. Most people file chapter 13 if they want to keep their car or home. A debtor will also be allowed to make payments towards past due secured debts to keep what they own over a span of time.
Do different states have different limits on how many times you can file a bankruptcy?
If a debtor needs to file chapter 7 again you must wait 6 years after your last filing. There is no limit to the time you may file a chapter 13. Chapter 7 requires a $ 170 filing fee and a $ 30 noticing fee. A $ 30 noticing fee and $ 155 filing fee will be imposed. Don’t worry about your filing fee costing more because you filed a joint petition with your spouse.
How many court dates will there be?
Attending the 341 creditor meeting is mandatory. Creditors may choose to attend along with a bankruptcy trustee. You will have a meeting around 40 days after filing. At this gathering you may be asked about your debt. Creditors and trustees who want to file a motion can at this time. Many debtors dispute debts at this time. If another hearing is required you will be sent notice in the mail.
Will bankruptcy make my credit even worse?
Filing bankruptcy will hurt less than the debt you already have. If you have extensive debt bankruptcy will actually help your credibility. Be aware that a bankruptcy will remain on credit report 10 years. Since the bankruptcy erased all or most of your debt, you may be eligible to secure new credit opportunities to regain your credibility. Many people just need a fresh start. If you’ve been in debt forever you feel helpless. You will be more aware of how to handle money. Many people were never taught how to handle money. 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. Vow to make good money choices in the future and you never have to be in debt again.
