To be clear, bankruptcy is a process where an individual or business can repay or eliminate some or all of their debts while being under the protection of the federal bankruptcy court. There are two basic types of bankruptcy; liquidation and reorganization. Under the liquidation category, there is Chapter 7 bankruptcy. It is known as liquid bankruptcy because a trustee can take and sell some of what you own in order pay off some of your debt. In addition, with Chapter 7, you may keep property that is that is protected by state law such as your home. This type of bankruptcy usually lasts between three to six months. With a Chapter 7 bankruptcy you are able to keep your car, clothes and household furnishings.
It is important to note that bankruptcy doesn’t work with some debts such as child support, spousal support and tax debts. However, bankruptcy can eliminate many debts such as medical bills, credit card debt and unsecured loans. Keep in mind; not everyone is eligible for Chapter 7 bankruptcy. If a person’s disposable income is high enough to fund a Chapter 13 repayment plan, you won’t be able to choose Chapter 7.
Chapter 13 bankruptcy is for those who have a reliable source of income because you will have to repay part of your debt. When filing for Chapter 13, you must present a repayment plan that shows how you will pay back your debts; often in a three to five year period. Depending on how much you earn, will decide the minimum amount you will repay. Besides Chapter 7 and Chapter 11 there are other bankruptcy types such as Chapter 11 and Chapter 12 bankruptcy.
The benefits of filing for bankruptcy are: getting a handle on what you owe, creditors leaving you alone, getting a fresh start, getting your dignity back and putting your life back in a more positive direction. Find out how filing for bankruptcy can put your life back on track! The Internet has many fine article on bankruptcy. Check them out today!