Bankruptcy should always be considered a last resort after all other efforts to recover from your debt problems have failed. The public record will stay with you for 10 years and beyond. Even a bank account application will ask if you ever filed bankruptcy, which you are legally required to answer. New laws are now place which require you to get involved with a valid credit counseling program before you can file anyway, so keep that in mind.
Bankruptcy laws vary from state to state, and everyone's situation is different. There are no absolute answers as to whether this would be a viable option for you. There are many lawyers who offer free consultation and can tell you how to proceed; the costs and pros and cons.
We can, however, clarify the most basic types of bankruptcy used by individuals. Each of these is known by the title of the Chapter of the Federal Bankruptcy Act in which they appear. The most common of these are Chapter 7 and Chapter 13.
Chapter 7 vs. Chapter 13
Chapter 7 bankruptcy is (or has been until new laws took effect) one of the most common types of bankruptcy used by individuals, but may also be used by businesses. Under Chapter 7, a court-appointed trustee collects the individual's assets. The trustee sells the assets for cash and pays the proceeds to the individual's creditors. Assets that are exempt under federal or state law do not have to be liquidated. Once the Chapter 7 process is final, the filing cannot be repeated for six years.
An example of who might file a Chapter 7 would be someone with little property but unable to meet their monthly payment obligations to creditors.
Unsecured debts, except tax and student load debt are forgiven, though there are extenuating circumstances which may apply to all unsecured debts. Creditors cannot contact you during the process or after the debts are discharged.
To qualify, you need to take a "means test" and complete the required pre-filing session with a credit counselor.
Chapter 13 bankruptcy is designed for an individual debtor with a steady source of income. It is generally more costly than filing Chapter 7, because it considerably more complex. Under the Chapter 13 plan, also called "individual reorganization," the debtor must settle his debts over a three to five year period. The debtor is allowed to keep his property. At a confirmation hearing, the court either approves or disapproves the plan. You are protected from debt collection calls and efforts to impose wage garnishment. Also, debts that were not canceled in a Chapter 7 discharge can be reduced in a Chapter 13 payment. Co-signers are also protected under Chapter 13.
To qualify, unsecured debts must be below $360,475 and secured debts less than $1,081,400.
An example of who might file a Chapter 13 would be someone with considerable equity in their home or property which they wish to keep. They're able to keep up with expenses, but are unable to keep up on the scheduled debt payment.
Here is hoping you can find a debt relief program that will work for you to avoid bankruptcy.
Bankruptcy laws vary from state to state, and everyone's situation is different. There are no absolute answers as to whether this would be a viable option for you. There are many lawyers who offer free consultation and can tell you how to proceed; the costs and pros and cons.
We can, however, clarify the most basic types of bankruptcy used by individuals. Each of these is known by the title of the Chapter of the Federal Bankruptcy Act in which they appear. The most common of these are Chapter 7 and Chapter 13.
Chapter 7 vs. Chapter 13
Chapter 7 bankruptcy is (or has been until new laws took effect) one of the most common types of bankruptcy used by individuals, but may also be used by businesses. Under Chapter 7, a court-appointed trustee collects the individual's assets. The trustee sells the assets for cash and pays the proceeds to the individual's creditors. Assets that are exempt under federal or state law do not have to be liquidated. Once the Chapter 7 process is final, the filing cannot be repeated for six years.
An example of who might file a Chapter 7 would be someone with little property but unable to meet their monthly payment obligations to creditors.
Unsecured debts, except tax and student load debt are forgiven, though there are extenuating circumstances which may apply to all unsecured debts. Creditors cannot contact you during the process or after the debts are discharged.
To qualify, you need to take a "means test" and complete the required pre-filing session with a credit counselor.
Chapter 13 bankruptcy is designed for an individual debtor with a steady source of income. It is generally more costly than filing Chapter 7, because it considerably more complex. Under the Chapter 13 plan, also called "individual reorganization," the debtor must settle his debts over a three to five year period. The debtor is allowed to keep his property. At a confirmation hearing, the court either approves or disapproves the plan. You are protected from debt collection calls and efforts to impose wage garnishment. Also, debts that were not canceled in a Chapter 7 discharge can be reduced in a Chapter 13 payment. Co-signers are also protected under Chapter 13.
To qualify, unsecured debts must be below $360,475 and secured debts less than $1,081,400.
An example of who might file a Chapter 13 would be someone with considerable equity in their home or property which they wish to keep. They're able to keep up with expenses, but are unable to keep up on the scheduled debt payment.
Here is hoping you can find a debt relief program that will work for you to avoid bankruptcy.
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