Bankruptcy is recommended for individuals, couples, and businesses that are no longer able to meet their financial obligations. In this short bankruptcy guide, you’ll learn that in certain situations, bankruptcy may allow you to discharge the majority of your debts. Bankruptcy has been around for hundreds of years. In the United States, federal laws govern the procedures and rules associated with filing a bankruptcy petition. There are two primary types of bankruptcy; Chapter 7 and Chapter 13. In a liquidation bankruptcy or Chapter 7, you will need to surrender your property outside of what has been exempted and this will then be sold. The bankruptcy trustee, in this case, will distribute the proceeds from your sale to creditors.
In exchange for this action, however, the majority of your debts will be permanently discharged, allowing you to get a fresh start afterward. In Chapter 13 bankruptcy, however, you will be able to keep some of your property so long as you stay current with the payments that you outlined on a three to five-year repayment plan. This allows you to repay your creditors a portion of what you owe in total.
Bankruptcy Guide: What’s Involved in Filing for Bankruptcy?
The first step for filing for bankruptcy involves putting together a petition and paying the fee with the bankruptcy court. The majority of personal bankruptcies will come with a fee of $300. Your initial petition may include information about your expenses, your income, the amount of money you owe as well as a comprehensive listing of any assets. A court hearing is then scheduled in order to review this information. The most common type of bankruptcy is Chapter 7 because individuals turn over all their non-exempt property in exchange for a near total liquidation.
Why Choose Liquidation Bankruptcy?
Anyone who is unable to pay their bills is largely attracted to a liquidation bankruptcy because it gives them an opportunity to start over quickly. Chapter 13 is different because it is classified as a reorganization bankruptcy, allowing individuals to keep their property in order to make monthly payments over up to five years. Bankruptcy is not available for everyone and a means test must be completed in order to file for Chapter 7 bankruptcy. If you’ve had your debts previously discharged with a Chapter 13 bankruptcy, you must wait six years before doing so again.
Any individual who has had a Chapter 7 bankruptcy in the past eight years is ineligible for filing again. In the event that you have too much disposable income, you may be barred from filing a Chapter 7 bankruptcy. Furthermore, businesses may also file for bankruptcy using Chapter 11, which allows companies to get protection from their creditors while they establish a repayment plan. There are many different federal regulations and laws with which a bankruptcy petitioner must comply when filing for bankruptcy. You may be eligible to represent yourself in court, however, this could increase your chances of making a serious mistake that could compromise the integrity of your case. This is why many people opt to hire an experienced Chapter 7 or Chapter 13 bankruptcy attorney to help them navigate the complex rules and ensure they do things right the first time around.
Filing for bankruptcy may help with Credit Card Debt and may even allow you to keep some of your credit cards. In a Chapter 7 bankruptcy, you may be able to actually keep a credit card and be able to use it after the bankruptcy has concluded. Mind you, keeping the credit card is not always recommended but in many cases, it is possible. Credit card debt is considered the least in debt priority which can often mean that some credit cards will not be paid, in this case, the debt may be considered dischargeable however, some credit card companies may choose to claim that the debt is non-dischargeable, in which case, the credit card company must show that the debtor purchased luxary goods or took hundreds of dollars in cash advances. In many cases the credit card debt is discharged and you will no longer owe the debt. Keep in mind that this discharge will only apply to the debtor and not the co-signor.