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.

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. If you qualify take advantage of total debt elimination. The next option will let you repay some of what you owe. An option for many is a liquidation of assets. Meaning that none exempt assets may be sold to pay a portion of the debt. Liquidation lies under chapter 7 filing. If you would rather keep valuables consider a reorganization of your debt. People can keep their property by making payments for 3 to 5 years. This choice pays off debt or a portion of it. Reorganization falls under chapter 13 filing and is the most common choice with consumers.

Chapter 7 bankruptcy

If you file for bankruptcy you are known as the debtor. The reason people file chapter 7 bankruptcy is to discharge all their debt. Any debt included in your discharge will not have to be repaid. At times people will get stuck with valuables that can’t be discharged because of a lien. If you have secured debt payment arrangements must be made or they will repossess your property. After a discharge has occurred you won’t be perused for certain debts. If your burdened with unsecured debt that is way too much to handle a chapter 7 bankruptcy will work best.

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 best part of a chapter 13 bankruptcy is you can keep your car and home. This will include assets that are past due or even equity that is not covered by your exemptions. You will have to make payments towards secured debt to get caught up. Many people file chapter 13 so they can keep their car and home. A debtor can make payments for secured debt keeping what they own.

Do people file bankruptcy more than once?

Every 6 years some people will file chapter 7 bankruptcy. There is no limit on how many times you may file chapter 13. For a chapter 7 bankruptcy you will pay a $ 170 filing fee and a $ 30 noticing fee. A $ 155 filing fee and a $ 30 noticing fee will need to be paid. The fees stay the same even if filing a joint petition with a husband or wife.

How many court dates must I attend?

A debtor is only required to attend a proceeding called a meeting of creditors or a 341 meeting. A bankruptcy trustee will attend and any creditors who chose to come. This event can happen as early as 40 days from filing. At this event your finances may be brought up. You could be subject to a motion or adverse action at this time by creditors or the trustee. You’ll have the opportunity to dispute your debts at this time. If more than one hearing is required you will be sent a letter by mail.

How will this bankruptcy affect my credit?

You already have bad debt so filing bankruptcy won’t hurt you much. Bankruptcy will give those who have a long history of debt a second chance. Bankruptcy will show on your credit report for 10 years. A bankruptcy will clear up most or all your bad debt then many creditor will send you new applications to rebuild your credit score. A lot of individuals need a fresh start. Living life with bad debt is no life at all. After filing you can make smarter financial decisions. The required skills needed to handle money have not been taught to most people. If you were not taught how to deal with financial matters as a child you may end up being irresponsible with money especially because your parent was never taught as well. Vow to make good money choices in the future and you never have to be in debt again.