If you are having some type of financial difficulty and find that you need to take some measures in order to get yourself back on financial track, you may consider filing for bankruptcy. There are other options as well if you don't have severe financial issues, like debt consolidation or credit counseling, but if your situation is pretty bleak and you find yourself struggling to pay the bills, bankruptcy may the the answer. This article will provide you with a brief overview on the two different types of bankruptcy that are available for you to consider.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is available for those who do not have a lot of income, or don't have a consistent income. You will have to pass a means test in order to qualify for Chapter 7, but if you do, you could wipe out a lot of your unsecured debt. However, in order to pay off at least some of the money you owe, you will need to sell off some of your assets.
The bankruptcy court does allow you to keep the equity in your home, and you are allowed to keep some clothing and other items to allow you to "start over." But the big ticket items that you bought, which may or may not be the reason you're now looking at filing for bankruptcy, will probably need to be sold in order to pay off your creditors.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows individuals to keep their assets. Those who don't qualify for Chapter 7 because they don't meat the means test can file for Chapter 13 bankruptcy. Chapter 13 allows individuals to use their monthly income to pay off their creditors. You will set up a payment plan with the court that lasts between three and five years. Your payments will go directly to the trustee appointed to handle your case, and the trustee disburses the payments to the creditors you owe. After you have met all of the obligations under your repayment plan, your bankruptcy will be discharged.
Obviously there are benefits to both types of bankruptcies, and both can offer you a fresh start financially. Also, when you file for bankruptcy, regardless of the type, there is an automatic stay that goes into place. What this means is creditors can't contact you and try to pursue collection once bankruptcy proceedings have started. Contact a law firm like the one found at curtishatfield.net that specializes in bankruptcy for more information regarding your situation.Share