*Note: This article is not legal advice, it is a personal opinion based on experience from the author. If you are seeking legal advice please check with your local bankruptcy attorney.
Reorganization or liquidation process is what bankruptcy is referred to. Business owners and people eliminate debt by going to federal bankruptcy court. It’s not hard to qualify for debt elimination. You can repay part of what you owe instead. Some are glad to liquidate their property. Your none exempt valuables will get sold at auction to cover some of your debt. In order to liquidate file chapter 7 bankruptcy. Some would rather reorganize what they owe. With the condition that monthly payments will be made for 3 to 5 years a debtor can keep their property. This option clears most of or all your debt. Reorganization is the most frequent choice and it falls under a chapter 13 filing.
Chapter 7 bankruptcy
If you file for bankruptcy you are known as the debtor. A chapter 7 bankruptcy will help a person to release all their personal liability for certain types of debt. Only in granted cases will debt be erased. A discharge cleans up most debt but it won’t clear up anything held by a lien holder. In a lien situation you still have to pay the debt or be forced to release the property to the lien holder. No more creditor negotiations can be sought after a discharge. Consumers who have way too much debt that cannot be repaid are good candidates for chapter 7 bankruptcy.
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. The advantages of chapter 13 is you can keep your home and car. You will include property that is past due also your equity that exemption won’t cover. You will want to make monthly payments towards your secured debts and even pay extra to get caught up on past due obligations. Most people file chapter 13 if they want to keep their car or home. Payments on secured debts can be made over time so you can keep some secured debts.
Can I only file bankruptcy one time?
If a debtor needs to file chapter 7 again you must wait 6 years after your last filing. There is no limit on how many times you may file chapter 13. Chapter 7 has a thirty dollar noticing fee and a one hundred seventy dollar filing fee. For a chapter 13 bankruptcy you will pay a $ 155 filing fee and a $ 30 noticing fee. A husband and wife may file a joint petition and the fee will stay the same.
How many court dates will there be?
One step towards finalization will be a proceeding called a meeting of creditors or a 341 meeting you must attend. A bankruptcy trustee and many others may attend. Expect proceedings to take place 40 days after a bankruptcy is filed. At this meeting you may be asked about your financial position. At this meeting a motion or adverse action can be filed. Don’t forget to dispute any debts at this time. Federal bankruptcy courts will send you a notice to appear if additional hearings are required.
What can I expect after filing bankruptcy?
You already have the worst credit so adding a bankruptcy wouldn’t hurt you more. Unpaid debt is far worse than a bankruptcy. Be aware that a bankruptcy will remain on credit report 10 years. After bankruptcy you will be a very popular candidate for new credit even if they say that your credit score will be affected for 10 years. Lots of people would love a fresh start. Bad debt can hurt the ones you love. After the discharge is finished you can practice good money habits. Being responsible with money is taught skill that many never learned. It’s not always your fault when you fall behind into debt some lose their income and others gain debt through divorce. Vow to make good money choices in the future and you never have to be in debt again.
