Are you currently buried under a mountain of debt that seem impossible to crawl out from under? If so, filing for bankruptcy may allow you to finally break free of this debt and begin enjoying the financial fresh start that you so desperately need and deserve. However, before you are able to enjoy the benefits that come along with filing for bankruptcy, you will first need to determine which type of bankruptcy petition is best suited to your particular needs. For most people, this will mean choosing between the use of Chapter 7 or Chapter 13 bankruptcy. Below you will learn more about how each of these options will impact your current financial situation so that you can choose the option that is right for you.
Filing For Chapter 7 Bankruptcy
The primary benefit of choosing to file for Chapter 7 bankruptcy is that you will be given the opportunity to completely discharge some of your debts. What this means is that you will no longer be responsible for paying these debts and your creditors will no longer be able to try and collect these debts from you. However, it is important to understand that not all debts can be discharged as part of a Chapter 7 bankruptcy.
Chapter 7 bankruptcy petitions address the issue of unsecured debts. These are debts that are assumed without the use of any collateral. For instance, credit card bills and medical bills are both considered unsecured debts, while a mortgage will be considered a secured debt since your home is used as collateral when obtaining a mortgage loan. If the majority of your debt is secured, filing a Chapter 7 bankruptcy petition will have very little impact on your financial situation. However, if you have a lot of unsecured debt, this type of bankruptcy may be able to provide the solution you are looking for.
Another fact you should know before filing for Chapter 7 bankruptcy is that only a portion of your assets will be protected when filing this type of petition. Any assets that are not protected by bankruptcy exemption laws can be seized and sold in order to cover your debts.
Filing For Chapter 13 Bankruptcy
Chapter 13 bankruptcy works to help you overcome your debt by restructuring this debt rather than discharging it. This is done by first trying to reduce the overall amount of your debt by reaching a settlement agreement with each of your creditors. These settlement agreements will often allow for administrative fees and interest charges to be waived in exchange for full payment on the principal of the debt. These settlement agreements will also establish a new payment schedule that will allow you to make reasonable payments each month while still being able to pay your current obligations.
While Chapter 13 bankruptcy will not result in the discharge of your debts, it can make repaying your debts much easier. Furthermore, by eliminating the discharge of any debts, you will also be able to eliminate the seizure of any assets. Consequently, if you have a significant amount of assets that you wish to protect, Chapter 13 bankruptcy may be the right option for you.
It is also important to note that while Chapter 7 bankruptcy only applies to personal bankruptcy cases, both individuals and companies can choose to file a Chapter 13 bankruptcy petition. Talk to a professional like Brent Sorenson & Associates, P.C. for more information.
Share24 February 2015
When I was a child, I regularly visited a local department store. At this lovely business establishment, one could purchase many items including clothing, shoes, and even hotdogs. Sadly, due to competition and other factors, the store closed its doors for the last time several years ago. If the owners of the store had considered bankruptcy options, they might still be meeting customers’ needs today. On this blog, you will learn how to resurrect your business with available bankruptcy alternatives. Regardless of whether you choose to liquidate your assets or reorganize your entity, the opportunity to remain in operation might be an option for you.