Bankruptcy Information: Learn How the Laws Work, Chapter 7 vs. Chapter 13 & The Filing Process
The collection agencies are hounding you relentlessly.... The calls keep coming in at all hours, you are making the best effort to meet the obligations of your various creditors, but... you are scrambling to make ends meet -- with no path to repaying your debts seems possible.
Despite your best efforts, if your finances are simply too upside down, it may be time to consider putting the debt protection laws to work for you. Consider the bankruptcy information in our guide carefully, weighing your options, the advantages and the disadvantages. Filing can provide relief and allow you to restructure your debts and settle obligations with your lenders, but is it truly right for you?
When considering if it's right for you, reviewing the legal protections available can feel overwhelming -- but the following guide is intended to help make sure you can make your decision with confidence....
Going bankrupt, the term is often first encountered in our youth after a hard fought session of Monopoly, and is clearly not the result anyone seeks after pouring so much blood sweat and tears into their fiscal endeavors, but bankruptcy laws can provide a powerful opportunity to press the reset button on your finances.
Bankruptcy Pros and Cons
Filing has consequences - very serious consequences which must be considered carefully before you declare. The acknowledgement that you can no longer pay your bills has an obvious impact on your credit reputation for years to come and can disqualify you for future borrowing opportunities.
I understand fully that in this present moment, crushed by debt, future financing is the last thing on your mind but bears taking a moments consideration. It is the single most damaging thing you can do to your credit history and will remain on your consumer credit reports for up to 10 years.
There are a variety of alternatives which should be explored before you decide to file. For example, there are often opportunities to restructure using debt consolidation loans, negotiation with your creditors, or to get back on your financial feet through downsizing and or asset restructuring. The bad credit impact is that serious, you will want to be sure that you have explored every possible alternative before being declared bankrupt.
If having been forewarned, filing still remains your chosen path, the court system provides the following options.
"Imagine overnight relief, a chance to start 100% fresh..."
Bankruptcy Chapter 7
The Chapter 7 is the most common method of seeking protection, as it can provide the fastest results and is open to be filed by individuals, corporations, married partners, and partnerships. A Chapter 7 is sometimes referred to as a straight bankruptcy and form filing begins a court appointed asset managed liquidation proceeding.
After filing you, as the debtor, turn over all property to the court appointed trustee to liquidate into cash in order to pay off outstanding lending with the proceedings. Following the liquidation of your assets, you will receive a discharge of your debts, typically within a four month period. Following your debtors discharge you have been given a fiscal fresh start to proceed without the onerous fiscal obligations that were crushing you prior to filing. It is important to note that federal, or tax debts are not possible to discharge through bankruptcy.
The Chapter 7 bankruptcy laws also provides for a number of asset exemptions that are deemed 'exempt' under Federal and State exemption laws, meaning that you get to keep these assets. Don't be confused, if you owe any money for these assets, like your primary car, your primary home, or other assets your particular state deems exempt, you will still be obliged to make the payments if you choose to exempt them. The assets that are exempted vary from state to state, so check your local laws to confirm what will potentially be protected if you declare Chapter 7.
Chapter 13 Bankruptcy Information
A different declaring option that is available is the Chapter 13, known as a reorganization bankruptcy. In this case you can choose to pay off outstanding financing over a period of three to five years. This is an ideal solution for people seeking protection who wish not to lose non-exempt properties while providing opportunity to restructure the terms of lending that cannot be met as contracted. A Chapter 13 is typically an option chosen by people with a predictable revenue that will allow them a reasonable ability in the coming years to pay off what they owe.
Do I Qualify To Go Bankrupt?
There are a few bankruptcy questions you should answer to find out if you are a good candidate. Firstly, if you went bankrupt within the last 8 years, you are prevented from refiling until that period is exceeded. If you did in the last 8 years but are in again in dire need of debt relief, you can file for the more stringent Chapter 13.
The following debts are not available to be discharged and so, if they are the primary reason for your considering filing, dissuade you:
- Trust fund taxes
- Criminal restitution
- Taxes for returns that were never filed or filed late (within 2 years of the petition date)
- Domestic support payments
- Taxes for which the debtor made a fraudulent return or evaded taxes;
- Student loans
- Drunk driving injuries
- Civil restitutions or damages awarded for willful or malicious personal actions causing personal injury or death
Bad Credit: Life After Bankruptcy
Following a successful discharge of your debts, you CAN rebuild. In fact, the federal laws for debt protection are intended to provide you a second chance, financially speaking, after being entangled in unmanageable debts.
The successful discharge of your financial obligations gives you an opportunity to gain lasting financial relief within a 3 to 5 month period and to say goodbye to the harassment of credit collection agencies for good.
With time your credit score will improve, bankers will begin to work with you again, and lending is not ruled out forever. Get your personal finances in order, and re-enter the marketplace with all the additional experience and wisdom gained from having suffered.
If after reviewing the bankruptcy information provided above, you feel it is the right choice, you can get help here:
"A second chance, get back on your feet and regain control of your finances..."