If you are having some type of financial difficulty and feel as though you may be at the end of your financial rope, you may want to consider filing for bankruptcy. While bankruptcy is a drastic move, it is one that can give you a fresh financial start. There are a couple of different types of bankruptcy you can file, and it will be beneficial if you discuss this possible decision with a bankruptcy attorney before you make the move to file for bankruptcy. .This article will give you a brief overview on the two types of bankruptcies.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is an option for individuals who don't have a decent cash flow that will allow them to consistently pay their debt each month. You have to take a means test in order to qualify for Chapter 7, and you will lose some of your valuable assets when you file Chapter 7. You can keep some "exempt" property, such as the equity in your home, clothing, household furnishings, Social Security payments you haven't spent, your automobile, and tools that you need for your occupation. But valuable assets, such as recreational vehicles, campers and the like, will need to be liquidated in order for you to pay off your debts.
There are some debts that do not qualify for Chapter 7 bankruptcy, such as student loans, tax debt and child support. Talk with a bankruptcy attorney to determine if Chapter 7 is right for you..
Chapter 13 Bankruptcy
If you decide to file for Chapter 13 bankruptcy, you will not lose any of your assets. Instead, you will use your monthly income in order for you to pay off all of your creditors. In order to qualify for Chapter 13, you must have a steady and consistent income. Your trustee will make the necessary payment arrangements with your creditors, and you will be paying your trustee, who will then turn around and disburse the money to your creditors. The payment plan will be structured in a way that you can afford, and you will have from three to five years to pay your creditors off. As part of a condition for Chapter 13, you will be required to participate in some type of debt counseling program.
Both bankruptcies offer an automatic stay, which means after you file for bankruptcy, your creditors can no longer contact you for payments. For more information, contact Wiesner & Frackowiak, LC or a similar firm.
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