Your personal financial ability to satisfy your creditors has been negatively impacted by loss of income, major health issue or retirement, and your savings have been exhausted. Without the ability to acquire additional funds or obtain a loan, you might need to consider declaring bankruptcy to relieve the stress and financial ruin caused by your burdens. The two venues available for personal bankruptcy are Chapter 7 and Chapter 13 and knowing the difference is important.
Chapter 7 bankruptcy eliminates all of your unsecured credit debt. You may not have to lose your vehicle, depending on its age and selling value. But, unlike in the past, you will now also lose your home.
Chapter 13 bankruptcy is a process that sets up a five year payment plan to repay your creditors at a reduced amount. Payments are made to a court appointed Chapter 13 Trustee who disburses the funds to your creditors. Unlike Chapter 7 you are allowed to maintain your home. Depending on the information that you are required to provide regarding all your income and assets, the amount of your payment will be determined at a court hearing with a bankruptcy trustee.
Determination for deciding on how to file bankruptcy and which chapter is most suitable for your individual situation requires legal assistance. Declaring bankruptcy is a serious and complicated process. You can research a list of attorneys that specialize in bankruptcy in your area on the internet. You will want an attorney that offers a free first consultation to review and advise you on your best option.
Both chapters allow you to retain a certain dollar value of assets. The exact amount depends on whether you are filing singularly or with a spouse and the law at the time of your filing. There are fees associated with bankruptcy that, at a minimum, include attorney costs, court filing fees and credit counseling courses. Your credit rating will be negatively impacted but you will have the opportunity to rebuild your rating over time. All of the positive and negative effects of bankruptcy will be explained by your attorney.