Personal bankruptcy is a legal way of providing a fresh financial start for people with overwhelming debt. Many people do not realize that the US offers five types of bankruptcy options. Bankruptcy Code; however, there are really only two viable options for most consumers; bankruptcy chapter 7 and chapter 13. Check out bankruptcy for more info.
Chapter 7, bankruptcy is entitled Liquidation: In a bankruptcy in Chapter 7, a court-supervised procedure takes place during which a court-appointed trustee collects the debtor’s estate’s assets, converts them into cash for repayment, and makes all necessary distributions to the debtor’s creditors; however, all this is done within the debtor’s right to retain certain exempt assets. Traditionally, a chapter 7 bankruptcy involves little or no nonexempt land. Because of this fact the debtor’s assets may not be actually liquidated. In this case, it is called a “no-asset bankruptcy.” It is important to realize that a creditor who attempts to collect on an unsecured claim will only receive a distribution from the bankruptcy estate if the case is an “asset bankruptcy” and the creditor can provide proof of their claim to the bankruptcy tribunal. The claimant will be grated a waiver in almost all chapter 7 bankruptcies that protects them from personal liability for most dischargeable debts. The whole process normally only takes a few months from the time the petition for bankruptcy is filed.
Chapter 13, Insolvency is entitled An Individual with Regular Income Debt Adjustment: Traditionally, a chapter 13 bankruptcy is used for people with a regular source of income or full-time employment. Chapter 13 is preferable to Chapter 7 for many, because it allows the debtor to keep some assets. A fraud under chapter 13 requires the trustee to compensate the lender over time. This time varies traditionally from 3 to 5 years. This type of proposal for repayment occurs during a confirmation hearing. The court will either approve or disapprove of the debtor’s repayment plan during that confirmation hearing. The judgment depends largely on whether the repayment plan satisfies the approval criteria of the Bankruptcy Code. In a lawsuit during Chapter 13 the claimant is typically able to remain under possession of their assets and properties when making payments to creditors; nevertheless, payments are made through a court administrator. Like chapter 7 bankruptcy the claimant does not seek automatic loan release. In chapter 13 bankruptcy the defendant must execute the repayment plan before the waiver is granted; however, while the agreement is in place, the applicant is shielded against litigation, garnishments and other creditor acts.
It is important to remain aware of the fact that not all debts under bankruptcy are discharged. Under each clause of the Bankruptcy Code the debts which can be forgiven may differ. The most common types of non-dischargeable debts, though, are tax liabilities, debts that the debtor does not bring to the court while filing for bankruptcy, debts for spousal or child support or alimony, debts to government agencies for fines and penalties owing to government entities, debts for personal injury sustained by the debtor’s operation of a motor vehicle when operating drunk, debts accrued
You will file a petition in federal bankruptcy court to file for bankruptcy. You will release an asset and responsibility declaration, as well as the investors ‘ listing plans. Once you have concluded bankruptcy filing, your creditors will no longer be able to take action against you to recover claims that have been discharged.