There are two options when an individual has decided to file for a Personal Bankruptcy.
These are Chapter 7 and Chapter 13 bankruptcies.
Chapter 7 is a liquidation of assets and Chapter 13 is a three to five year repayment plan.
Sometimes things happen in life that we have no control over and they end up putting individuals in circumstances where they have no choice but to file for Personal Bankruptcy in order to get a fresh start.
Losing a job, the financial repercussions of divorce, high medical expenses and unsecured credit card debt are some of the most common reasons that may cause a person to have to file bankruptcy.
Chapter 7 bankruptcy releases the debtor from any further personal liability for certain debts.
As soon as the Personal Bankruptcy is filed with the United State Bankruptcy court; all communications from the creditors must cease.
In this type of case, any assets that can be converted to cash are sold by the court appointed trustee and sold via personal sale or through public auction and distributed among all of the creditors equally.
Sometimes an individual does not have any assets that can be turned into cash to settle their debts.
This is called "no-asset" cases.
If this is the case, the debtor is released from all of their debt although there may be liens placed on any property that the debtor owns for certain types of secured debts.
Chapter 13 bankruptcies are different from Chapter 7 in the respect that it is not a release of debt, rather it is a reorganization of debts where a repayment plan of three to five years is put in place.
This is the preferred way to file Personal Bankruptcy for those who have valuable assets that they want to keep.
Once the repayment plan requirements are met, the debtor is then discharged from all debt and they are free from any further action from the creditors as long as the payments are made as agreed.
There are alternatives other than filing for Personal Bankruptcy that one should consider before filing.
It may be possible to settle out of court with some of your debtors.
There are debt counseling services that can help you consolidate your monthly payments and obtain a lower overall payment amount.
Debt consolidation loans are another option as well.
This is where the individual borrows against the equity in their home to pay off all of their other bills.
Using an alternative to bankruptcy may actually hurt in the long run if you do ultimately have to file bankruptcy, so weigh all of your options before making a decision.
These are Chapter 7 and Chapter 13 bankruptcies.
Chapter 7 is a liquidation of assets and Chapter 13 is a three to five year repayment plan.
Sometimes things happen in life that we have no control over and they end up putting individuals in circumstances where they have no choice but to file for Personal Bankruptcy in order to get a fresh start.
Losing a job, the financial repercussions of divorce, high medical expenses and unsecured credit card debt are some of the most common reasons that may cause a person to have to file bankruptcy.
Chapter 7 bankruptcy releases the debtor from any further personal liability for certain debts.
As soon as the Personal Bankruptcy is filed with the United State Bankruptcy court; all communications from the creditors must cease.
In this type of case, any assets that can be converted to cash are sold by the court appointed trustee and sold via personal sale or through public auction and distributed among all of the creditors equally.
Sometimes an individual does not have any assets that can be turned into cash to settle their debts.
This is called "no-asset" cases.
If this is the case, the debtor is released from all of their debt although there may be liens placed on any property that the debtor owns for certain types of secured debts.
Chapter 13 bankruptcies are different from Chapter 7 in the respect that it is not a release of debt, rather it is a reorganization of debts where a repayment plan of three to five years is put in place.
This is the preferred way to file Personal Bankruptcy for those who have valuable assets that they want to keep.
Once the repayment plan requirements are met, the debtor is then discharged from all debt and they are free from any further action from the creditors as long as the payments are made as agreed.
There are alternatives other than filing for Personal Bankruptcy that one should consider before filing.
It may be possible to settle out of court with some of your debtors.
There are debt counseling services that can help you consolidate your monthly payments and obtain a lower overall payment amount.
Debt consolidation loans are another option as well.
This is where the individual borrows against the equity in their home to pay off all of their other bills.
Using an alternative to bankruptcy may actually hurt in the long run if you do ultimately have to file bankruptcy, so weigh all of your options before making a decision.
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