Bankruptcy is a federal court process that can help consumers eliminate overwhelming debts or establish a plan to repay them. Depending on your income and circumstances, bankruptcy laws may give you a way to erase many financial obligations and start afresh.
Personal Bankruptcy Choices Chapter 7 And Chapter 13
For personal bankruptcy there are basically two ways to get bankruptcy protection, they are chapter 7 and chapter 13 filings.
Both chapters are a judicial process whereby someone declares that they are unable to pay their debt under Title 11 of the United States Code.
Bankruptcy is a process by which a debtor can obtain relief from his debts, through the courts. This relief may come in a variety of forms, including full or partial discharge of the debt, or the imposition of a payment program consistent with the debtor's financial means.
Lets look at specifics.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is known as “straight bankruptcy" and is the preferred option for people with little or no property and a lot of unsecured debt.
This is the most common type of bankruptcy proceeding filed and it is the “liquidation" bankruptcy where most debts are discharged without requiring the debtor to make any payments. The term “liquidation" refers to the process where a petition is filed with the bankruptcy court detailing the individual's property, debts, and financial situation.
The trustee then takes your items of value ells them to repay your creditors a portion of your debt. If there is any debt left you will no longer be responsible for it.
For a person with little or no assets this is the quickest way to eliminate financial worries.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is also known as a reorganization bankruptcy and it provides a better solution for those consumers who have a regular income, secured debts and do not which to loose their property.
Chapter 13 bankruptcy less common than Chapter 7 however it allows the consumer to submit a plan to the bankruptcy court to repay the debts that are secured. This plan us usually executed over a three to five year period of time.
It is important to note that Chapter 13 bankruptcy serves not to discharge you from your debts but rather to reorganize them and repay them within the three to five year period.
This means that this option is probably best for people with property and assets that they want to keep. Plus it means that they also have a predictable source of income allowing them to repay their debts and still maintain a standard of living.
Chapter 7 Vs Chapter 13 Bankruptcy Which Is The Best Choice For You
Bankruptcy can do wonders if you are in financial jeopardy, but filing is not a decision to be taken lightly. The fact is that Bankruptcy is a complex legal process, which means you should gain as much understanding as possible before you jump in. In fact did you know that Bankruptcy doesn't work on some kinds of debts?
Fortunately there is a great free resource you can check out to get your Bankruptcy Questions answered. Click to http://www.bankruptcyreports.info a popular info site for those considering bankruptcy to relieve the stress of debt.