hinking about filing for bankruptcy? Here is everything you should know before taking the plunge.
Bankruptcy is a legal process in which the person owing money, a debtor, owes more money than they can repay and is either allowed to repay a portion of the money over time or have the entire debt forgiven. There are three common bankruptcy cases, chapters 7, 11, and 13.
You Are Not Alone
There were an estimated 1,071,932 bankruptcy filings in the United States during 2013. Some common causes include overextended credit, unexpected expenses such as having to buy a new car or pay for a funeral, a reduction in income, or job loss. Illnesses and injuries also play a large part, as medical bills affected an estimated 2 million people in the United States during 2013. It is important to realize the causes are larger than the bankruptcy process itself, and a trustworthy bankruptcy attorney will be able to aid you in this course.
Chapter 7 Bankruptcy
The most common choice of bankruptcy filings, Chapter 7 is designed for debtors in extreme financial difficulty who do not have the ability to pay their existing debts. In this case, the debt is erased and the debtors will start with a clean slate. Even though this bankruptcy can stay on your credit report for 10 years, it typically is completed in or around six months. This offers you an almost immediate freedom of debt in exchange for longer lasting hurt on your credit.
Chapter 11 Bankruptcy
As there are no income requirements for this arrangement, Chapter 11 allows corporations and joint partnerships to reorganize without having to liquidate all assets. No trustee is needed to help collect payments, so it is up to the agreements of the debtors. Not many choose to go this route. There was a total of 8,980 Chapter 11 bankruptcies filed in the United States during 2013.
Chapter 13 BankruptcyThis arrangement is only available to individuals with regular income. Subjected to debt limitations, this form of bankruptcy obligates the debtor to repay their debt over an extended period of time. This is appropriate for debtors who would like to regain their assets through a repayment plan.
Filing for bankruptcy does not have to be a complicated process! It is imperative to find an honest and dependable bankruptcy attorney to lead you out of the hole- remember you are not alone!