Bankruptcies: Chapter 7 & 13

If you are like many people in the world today you may find yourself struggling financially. This includes falling behind on your bills such as your mortgage payments, car payments, or credit card payments. Many times one finds if they fall behind they have a hard time catching back up. If this is the case you may have considered bankruptcy. Here is some information on bankruptcy that you may not be familiar with.

To begin with you will need to know that there are two different types of bankruptcy. There is a Chapter 7 bankruptcy or a straight bankruptcy and then there is a Chapter 13 bankruptcy. A Chapter 7 bankruptcy is basically where you are given the chance to start out fresh. Under this type of bankruptcy all of the property of the debtor that is considered non-exempt will be sold and the money earned from selling of the assets will be given to any of the creditors that the debtor has. This is the type of bankruptcy that is done where the debtor basically does not possess anything to lose or no real assets. It is also the quicker bankruptcy. How it works is that there is a person who is appointed to be in charge of all the non-exempt properties and assets of the debtor so that they are able to try to sell them to pay off the creditors. If the debtor has no non-exempt assets they still do not have to worry about having to repay debtors. A plus of a Chapter 7 bankruptcy is that you are still able to make payments on your home or your vehicle.

A Chapter 13 bankruptcy is were the debts of the debtor will be restructured so that they are able to repay their debtors. This type of bankruptcy is preferable to those debtors who have a reliable, stable job with a steady flow of income coming into the home. With this type of bankruptcy you are given an interest free plan to pay back your debt. Once these payments are done then the debtor will be given a discharge of the debts. The advantage of this that you are able to keep all your assets.

The cost for filing for bankruptcy varies state to state. On average for filing a Chapter 7 bankruptcy you will spend anywhere from $1200 to $1500 plus some court fees that may apply. If you are filing for a Chapter 13 bankruptcy you can spend up to $2000. One is able to try to do this on their own but you will greatly benefit from hiring a bankruptcy lawyer. A bankruptcy lawyer will be able to help you decide which is the best way for you to file and what assets you have and the best way to deal with the creditors.

Once you have officially filed for bankruptcy there will be what is called an automatic stay put into place that prevents your creditors from trying to contact you or for any more collections taking place. You will then have a trustee goes over all your properties and assets to decide what is considered exempt and not exempt. You will also need to submit a list of all your creditors. The total time after filing for bankruptcy and getting a discharge is between 3 and 7 months sometimes longer if there are special circumstances.

Making the decision to file for bankruptcy is not one to be taken lightly. Once you have taken everything into consideration be sure to do your research! This makes your bankruptcy decision much easier and the whole process a lot smoother!