When individuals start drowning in debt, they may try to figure out the best way out. Some people will attempt to pay off their debt in various ways that may work. In the event that they are unable to pay off their debt, they may have no other option than to turn to filing for bankruptcy. Similar to paying off debt, there are multiple options for filing for bankruptcy. In this, there are various processes as well as penalties.
As a general rule, the two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy will consist of your assets being liquidated, while Chapter 13 bankruptcy will consist of developing a payment plan that must be paid over the course of three to five years. If you are looking to minimize the number of your assets that are lost because of bankruptcy, then you should familiarize yourself with how assets are factored into each type of bankruptcy filing. Read on to learn more.
Chapter 7 Bankruptcy: You'll Lose More Assets
If you have a limited income, Chapter 7 bankruptcy is probably the most ideal for you. The reason for this is due to the fact that you will not be required to make payments. The process of filing for Chapter 7 bankruptcy is a relatively quick process. Ultimately, it can be completed in months, leading to all of your debts being completely eliminated. However, this particular form of bankruptcy will result in you losing all of your assets other than those that are exempt. Some examples of exempt assets include your personal belongings (like clothes) and household goods. However, exempt assets will vary from one state to the next, so check with an attorney.
Chapter 13 Bankruptcy: You'll Keep More Assets
If you want to avoid losing your home, vehicle, and other significant assets to the bankruptcy process, you may want to consider filing for Chapter 13 bankruptcy. However, keep in mind that the process of this particular type of bankruptcy can take anywhere from three to five years. In addition, it will take some self-control and determination on your end. The reason being is that all of your debts will be completely re-organized, and you will be required to make payments on them.
If you have found yourself in a situation where debt is spilling over and you need to figure out how to become debt-free, contact a bankruptcy attorney in your area to discuss the options available to you and gain assistance in determining which bankruptcy filing best suits your individual situation.Share
29 July 2020
Many people assume that when they file Chapter 7 bankruptcy, they will have to give up their homes and other property. This is not necessarily the case. I am a bankruptcy attorney, and I have helped many clients file for Chapter 7 bankruptcy without giving up homes, cars, and other property. When you file for bankruptcy, the property you are allowed to keep depends on your individual circumstances and the state where you live. Most states allow exemption for property you are currently paying for. This blog will guide you through that information and help you determine if filing Chapter 7 bankruptcy is the right choice for you.