Facts
about Bankruptcy Laws:
Chapter 7 and Chapter 13
Filing for bankruptcy is often a highly personal judgment call. For
some, declaring bankruptcy is an unfortunate but
realistic choice. However, many have sought debt relief, seeking a fresh
start, only to discover serious and negative long-term consequences
arising from the decision to file for personal
bankruptcy. Generally, if you have:
- a short time
until retirement
- more than a
few dependents
- a large debt
obligations
- a small amount
of savings
- a large amount
amount of non-dischargeable debt
...the
more it becomes likely that bankruptcy is a valid option.
Chapter
7 Bankruptcy Laws
Chapter 7 bankruptcy
liquidates assets and uses them to pay creditors according to which have
precedence in the Bankruptcy Code. It is the quickest, simplest and the
most frequently selected kind of bankruptcy filing and you are absolved of
most unsecured debts within 3-6 months of filing. Certain debts cannot be
waived by Chapter 7 bankruptcy such as child support, student loans, drunk
driving fines and others. When filing bankruptcy forms, you must disclose
the following personal financial information to the courts:
- Income,
property and assets
- Debts and
liabilities
- Living
expenses
- Any
exempt assets or property (Bankruptcy Code)
- All
property transactions for the prior two years
Chapter 13 Bankruptcy Laws
Chapter 13
bankruptcy, on the other hand, is a repayment plan in which the court
binds the debtor and the creditors to terms of repayment. The
debtor retains property and makes regular payments to a trustee out of
future income to pay creditors over the life of the bankruptcy plan.
When filing
bankruptcy under Chapter 13, you commit to partially paying off your
creditors over a 3 to 5 year period but the bankruptcy may remain on your
credit report for up to 10 years after you make your last payment, ruining
your chances to get the credit necessary for the purchase of a home or
business. Bankruptcy also can be reported for life if you apply for a job
or life insurance. Agonized regrets over "what might have been" are too
often the ultimate reward of filing bankruptcy.
Debt
Consolidation vs. Bankruptcy
If your debts are
mostly unsecured, debt consolidation makes more sense than filing for
bankruptcy. A debt consolidation plan will create a budget for your
realistic monthly living expenses. With the money available each month
after paying these expenses,
We
will
negotiate a repayment plan for you that may include a reduced or even
zero interest rate!
Our clients, in most
cases, are able to get out of debt in 3
to
5 years.
This alternative is greatly preferable to suffering needlessly through
court mandated creditor payments, years of bad credit ratings and denied
business and financial opportunities which can result from bankruptcy.
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