Bankruptcy: What You Should Know

*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.

Bankruptcy is referred to as a reorganization or liquidation process. Federal court handles bankruptcies for people and businesses with debt. People do still qualify for debt elimination. You can choose to repay some of what you owe. People sometimes want to liquidate what they own. The courts may order you to let them sell none exempt assets to pay a portion of the debt. Liquidation falls under the chapter 7 filing option. Lots of people would reorganize their debt. With the condition that monthly payments will be made for 3 to 5 years a person can keep their property. Most or all debt will be cleared with this choice. Reorganization is a part of chapter 13 and is the most popular choice.

Chapter 7 bankruptcy

If you file for bankruptcy you are known as the debtor. All kinds of debt can be covered by a chapter 7 bankruptcy. Any debt that a debtor owes and is covered under your discharge will not need to be repaid. Sometimes people get stuck with property that is held out of discharge by a valid lien. With a debt held by a lien you must pay up or return the property. Debts included in a discharge cannot be perused by creditors. When there’s no way to pay back debt chapter 7 may be an option for you.

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. This will allow you to keep property that you owe money to and it will take care of the stuff not covered by your exemption. The courts may order you to make payments towards your secured debts. A chapter 13 bankruptcy allows you to keep your house and car. If you want to keep some of what you own you can continue to make payments only if its secured debt.

How many years must I wait to file bankruptcy again?

Some people will file chapter 7 bankruptcy every 6 years. There is no limit on how many times you may file chapter 13. Chapter 7 bankruptcy is affordable you only pay a $ 170 filing fee and a $ 30 noticing fee. For a chapter 13 bankruptcy you will pay a $ 155 filing fee and a $ 30 noticing fee. Filing fees stay the same even if its a joint petition for a husband and wife.

How many court dates must I attend?

One step towards finalization will be a proceeding called a meeting of creditors or a 341 meeting you must attend. You will meet face to face with the creditors who show up and a with a bankruptcy trustee. After you file expect to have a proceeding in 40 days or so. Your financial position could be discussed at this meeting. Creditors and trustees who want to file a motion can at this time. If you have false debts dispute them at this time. If additional hearings are required the federal courts will send you a notice to appear.

How will this bankruptcy affect my credit?

Filing bankruptcy will hurt less than the debt you already have. You will be shocked at how bankruptcy will help you as opposed to causing you damage. After 10 years a bankruptcy will be removed. After a bankruptcy has cleaned up your debt many credit opportunities will be available to you to start rebuilding your credit. Lots of people just need a fresh start. Living most your life with bad debt trailing your every move is not a fun situation. When filing is complete you can make better choices with money and credit. Many people have not been taught the necessary skills required to handle money. Not learning money basic as a youth or even losing your job can cause future problems like bankruptcy. It is awful to be in debt but the future can be bright next time around.