The Basics of Chapter 7 and Chapter 13 Personal Bankruptcy

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Your debt can become so unmanageable that the only option you will have it file for bankruptcy. When this happens, your first step should be to contact a law firm, so they explain bankruptcy and how it works. It is possible to file bankruptcy without an attorney, but when you are dealing with issues that have strong financial and legal outcomes like bankruptcy and IRS debt, it’s best to do so with the best counsel you can get.

Before you proceed with filing, it’s required that you meet with a credit counseling organization recognized by the Department of Justice’s U.S. Trustee Program. The counselor has the job of evaluating your personal financial circumstances and explaining bankruptcy law definition. They should also explain any alternatives to bankruptcy or help you come up with an appropriate budget plan.

Unlike bankruptcy for business debt, there are basically two types of bankruptcy that you can pick from as an individual. These are chapter 13 and chapter 7. With chapter 7, you will have to trade in some of your assets in order to clear your debts. However, there are certain items that you can keep, like your vehicle and other personal belongings. You will also get to keep a certain percentage of equity in your home. Chapter 13 is available if you earn a regular income. With this option, you will be required to come up with a payment plan for your debts and stick to it.

Many people who are failing to manage their debts have the option of consulting bankruptcy attorneys to file for bankruptcy. It’s crucial to get the help of your attorney so you can have someone to guide you and answer your questions. For instance, you might want to know things like, can I make extra payments on my chapter 13, can I get chapter 11 or 13, or can I switch from chapter 13 to chapter 7? While this can deliver a very hard blow to your credit score, filing bankruptcy can help protect you from things like having your home foreclosed.

When it comes to individuals, there are two main options when filing for bankruptcy. These are Chapter 7 and Chapter 13. Chapter 7 is essentially the type of bankruptcy that trades in some of your assets, so you can pay your creditors. However, you will get to keep some items like your car, a percentage of equity in your home, and several personal items. On the other hand, with a chapter 13, chapter 13 100 percent plan, or wage earner’s plan, you will be able to come up with a payment plan to settle your debts. However, this option is available for individuals with a regular income.

No one would choose to be bankrupted. Bankruptcy what is it? This is what some ask in self-denial of their current financial status. However, it is necessary when you aren’t in a good financial position to pay your debts; check out for bankruptcy minimum to file for bankruptcy. You need to hire a chapter 7 attorney to help you figure it out. Below are the benefits of filing chapter 7 bankruptcy protection.

Debt forgiveness

If the bankruptcy results are not bad, through chapter 7 bankruptcy, a debtor can pay off the debt fairly quickly. You will realize that most chapter 7 bankruptcy cases last for less than six months. You have a chance to eliminate debts like personal loans, credit card balances, and other unsecured debts.

Relief from credit harassment

After you file for bankruptcy, there is the implementation of an automatic stay on creditors by the court. This forces your creditor to stop harassing you and repossessing your property. If your creditors attempt to contact you to intimidate you whatsoever, the chapter 7 bankruptcy can immediately end their harassment.

Home and personal property exemptions

When you file for chapter 7 bankruptcy, it doesn’t mean that you are expected to sell everything you possess. The law exempts some properties that matter to you the most. In this case, you are allowed to keep your vehicle, household items, and home.

Do you have so much debt that you have been unable to pay your bills? If so, you’re not alone. Each year, there are an estimated 1.1 million households in the United States that undergo bankruptcy. Although medical bills are the most common reason for bankruptcy in the U.S., affecting around two million people in 2013, other reasons include credit card debt, debt from loans, falling behind on a mortgage, and divorce.

Before meeting with one of the bankruptcy lawyers near you, it’s important to know the basics of personal (or household) bankruptcies. Here are a couple of questions you may have on this subject and their answers:

What is the difference between Chapter 7 and 13 bankruptcy?

Bankruptcies can be filed by individuals, businesses, and even municipalities, such as the city of Detroit. When it comes to personal bankruptcy, these are filed under Chapter 7 and Chapter 13 of the U.S. bankruptcy code.

Chapter 7, which can also apply to businesses, is a liquidation bankruptcy; this means that a person’s unsecured assets will be sold off to pay their debt to their creditors. Any debt that remains after that will be absolved in court. This process takes about six months to complete and only costs around $300 to file.

Chapter 13 bankruptcy only applies to individuals (for businesses it would be similar to a Chapter 11 filing). Chapter 13 establishes a payment plan for the debtor in order to help him or her pay off their debt with a reasonable timetable — usually around three to five years. Where a Chapter 7 bankruptcy can result in a debtor losing a home or other assets, filing Chapter 13 can prevent this from occurring.

Does filing for bankruptcy require a lawyer or attorney?

While these words are often used interchangeably, they actually mean different things in legal terms. All attorneys are lawyers, meaning they have law degrees, but not all lawyers are attorneys. A lawyer becomes an attorney once he or she has passed the Bar exam; from there, the attorney is now qualified to represent a client in court. If you are fighting your bankruptcy case in court, you will need a bankruptcy attorney. Any bankruptcy lawyer should be able to give you information on whether or not you have a case, though.

Whether or not you file for bankruptcy is up to you, and it also depends upon your individual circumstances. The best way to know for sure is to speak with a bankruptcy lawyer in your area. Have more questions? Leave a comment below. Read more.

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