Bankruptcy is referred to as a reorganization or liquidation process. Bankruptcy is finished in federal court to erase the debt that people or businesses have. People want to qualify for total debt elimination. You can pay off some of what you owe instead. Many people choose to liquidate their property. The courts may order you to let them sell none exempt assets to pay a portion of the debt. In order to liquidate, file for chapter 7. If you would rather keep valuables consider a reorganization of your debt. Monthly payments can be made for 3 to 5 years allowing you to keep your property. This selection pays most of or all remaining debt. A chapter 13 will reorganize your debt and is this most accepted choice.
Chapter 7 bankruptcy
If you file for bankruptcy you are known as the debtor. The point of a chapter 7 bankruptcy is to release all personal liability for specific types of debt. Debt included in a discharge will not need to be repaid. Bankruptcy eliminates most debt except debt held by a lien holder. Secured creditors that you owe will hold you liable to pay your debt or risk losing the property. No more creditor negotiations can be sought after a discharge. Many who have a lot of debt that can no longer be repaid are great chapter 7 candidates.
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. This process includes equity not held under the exemption and other items of value that you may hold a negative balance on. Many pay extra on their monthly payments for secured debt. A lot of people want to keep their house and car so they file for chapter 13. You can keep what you owe by making payments towards secured debt.
How many times can I file bankruptcy?
Every 6 years some people will file chapter 7 bankruptcy. You can file chapter 13 again and again. Chapter 7 bankruptcy is not too expensive you only pay two hundred dollars. There will be a $ 30 noticing fee as well as a $ 155 filing fee. When a joint petition for a husband and wife is filed the fees will not double.
How many court dates will there be?
Attending the 341 creditor meeting is mandatory. At this gathering expect to meet the bankruptcy trustee and some creditors. After about 40 days expect to receive notice to appear. Creditors and trustees many times will have questions about your financial situation at this meeting. Creditors and trustees have the right to file a motion or adverse action at this time. You may choose to dispute any false debts at this time. If another hearing is required you will be sent notice in the mail.
Is bankruptcy worth the credit risk?
Your debt has already damaged your credit so a bankruptcy won’t hurt. Many who have old debt will not suffer from a bankruptcy. Proof of a bankruptcy will remain for 10 years. A bankruptcy will clear up most or all your bad debt then many creditors will send you new applications to rebuild your credit score. Some just need a fresh start. Living life with bad debt is no life at all. After the discharge is finished you can practice good money habits. 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. From here on out good financial decisions can be made.
