Bankruptcy: What you Should Know

Reorganization or liquidation process is what bankruptcy is referred to. Bankruptcy is finished in federal court to erase the debt that people or businesses have. Tons qualify for total debt elimination. You can choose to repay some of what you owe. Some decide to liquidate their property. Meaning that none exempt assets may be sold to pay a portion of the debt. Liquidation falls under the chapter 7 filing option. A majority of people would rather reorganize their debt. Monthly payments can be made for 3 to 5 years allowing you to keep your property. This selection pays most of or all remaining debt. A chapter 13 filing works best for most people because they can reorganize debt.

Chapter 7 bankruptcy

If you file for bankruptcy you are known as the debtor. The point of a chapter 7 bankruptcy is to eliminate most all your debt. All debts that get discharged will not have to be repaid. People sometimes cant discharge all their debt because of an imposed lien. You are still liable to pay debt to secured creditors or be forced to give back the property. After a discharge creditors may not try to collect or communicate with a debtor about a debt. Many who have a lot of debt that can no longer be repaid are great chapter 7 candidates.

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. You can keep your car or home with a chapter 13 bankruptcy. This will include anything your exemption won’t cover and property with an unpaid balance. It will still be your obligation to pay monthly payments for some secured debt. Chapter 13 will allow you to keep your vehicle and home. You will be able to keep certain secured debt by making payments over time.

Can I only file bankruptcy one time?

You cannot file chapter 7 again till 6 years have lapsed since your last filing. Chapter 13 has no limit to the number of times you can file. Chapter 7 requires a $ 30 noticing fee and a $ 170 filing fee. The filing fee for chapter 13 is $ 155 and a you'll pay a $ 30 noticing fee as well. A husband and wife may file together and the fee will never change.

Do I need to be present in all court dates?

You must attend a proceeding called a meeting of creditors or a 341 meeting. Creditors may or may not come but you will meet a bankruptcy trustee for sure. This event will happen 40 days from filing. At this meeting you may be asked about your financial position. Creditors and trustees have the right to file a motion or adverse action at this time. Remember you can dispute some debts at this time. If your scheduled for additional court dates you will get a notice in the mail.

Is bankruptcy an unwise decision?

Your debt has already damaged your credit so a bankruptcy won’t hurt. Unpaid debt is far worse than a bankruptcy. Be aware that a bankruptcy will remain on credit report 10 years. I knew a lady who filed bankruptcy and after it was done she was able to secure credit for a new home. Many people just need a fresh start. Bad debt can hurt the ones you love. You will want to make wise money choices after filing. The required skills needed to handle money have not been taught to most people. This can happen if you or your parents were never educated on how to handle money or if you never had enough money to handle. Vow to make good money choices in the future and you never have to be in debt again.

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