In case of bankruptcy, people can liquefy their assets so that they are able to repay their debts. This happens when the debtors are no longer able to manage repayment on their own. The government came up with this law in order to protect the financial interests of not just individuals but a business that is facing financial crunch as well. The government has introduced different types of bankruptcies that people can sign for in accordance with their situation. People applying for bankruptcy might lose some or most of their personal property so that the loan can be repaid; however, this also gives them a fresh start which is free from all debt collectors and repayment pressure.
Guide to chapter 7 and 13 of bankruptcy:
The two most common bankruptcies that people opt for are chapter 7 and chapter 13. They have a different process that requires to be followed so that the clients are able to repay the debts as quickly as possible.
- Chapter 7: Under chapter 7, trustees are assigned to you. These trustees will have a legal right to sell away your unsecured assets that will repay the loan you took from your creditors. You would be provided with your discharge around 60 days after you have had a meeting with your trustees and creditors. The entire process of selecting chapter 7 bankruptcy attorneys, assets and selling them for repayment takes around three to four months, after which you are freed from all the debts and debt collectors.
- Chapter 13: This type of bankruptcy plan takes more time than chapter 7 as in this case, you have to come up with an entire plan that will help you repay the debt. The plan that you make has to be approved by the law and only then can you start with your payment. To apply for this type of bankruptcy, you have to have a regular paying source. This type of repaying method takes around four to five years to repay all your debts. Additionally, the type of plan you make depends on the total loan and your regular income.
- Chapter 7: In order to get eligible for bankruptcy chapter 7, you must have an income that is less than the median stated by the law. Your income is compared with the household expenses on a daily basis, and is the leftover sum is greater than the median of the state; you will not be able to apply for chapter 7. If you are able to prove that you have more expenses or your income less, you might be allowed to apply. Make sure to hire a chapter 7 bankruptcy lawyer to ease the entire procedure.
- Chapter 13: In order to get eligible for bankruptcy chapter 13, you have to own a house and have a regular income. The unsecured debts that you have should also be under a specific amount that the state specifies during the process. You may not be allowed to file for bankruptcy if your bankruptcy has been declined by the court just 180 days prior to your next filing. You can even hire a bankruptcy lawyer to make sure you don’t face any problem and come up with an acceptable repayment plan.
While filing a case for bankruptcy, refer to all the categories of chapter 7 and chapter 13 mentioned above so that you are able to choose the best one for your situation. Plan your steps wisely and keep consulting your attorney and you will be free from your debts soon.