Filing for bankruptcy is usually the last option available for those in desperate financial straits. Unfortunately, many people, even those burdened with large debts, know very little about bankruptcy law and how the bankruptcy process works. This article looks at some of the most crucial questions surrounding this important topic.
Should You File Under Chapter 7 or Chapter 13?
You typically have two options when filing for bankruptcy: filing under Chapter 7 or Chapter 13. Chapter 7 allows you to discharge most of your debts without having to repay. The downside of filing under Chapter 7 is that most of your assets, with a few key exceptions, can be taken to pay your creditors. This form of bankruptcy works best for those with few remaining assets.
Chapter 13 is different from Chapter 7 in that your property will not be taken from you and given to your creditors. Instead, you set up a payment plan where you pay off all or a significant portion of your debt in monthly payments over several years.
It's often difficult for the average person considering bankruptcy to determine which type of filing will be in their best interests. Many people will need the advice of a bankruptcy lawyer to help them with this decision.
Whats Debts are Eliminated in Bankruptcy?
Some debts can be eliminated in bankruptcy, while others cannot. Typically, this is an issue that arises in Chapter 7 rather than Chapter 13. Most unsecured debt, such as credit card debt, can be eliminated through bankruptcy. If you have secured debt that is collateralized with property, then you must surrender the property. If you have a judgment or lien issued against you, determining whether the lien or judgment can be eliminated is often a complex issue that you should discuss with an attorney. A key point to keep in mind is that a few specific types of debt, such as child support payments and most tax debt, cannot be discharged through bankruptcy.
How Long Must You Wait to File Again?
If you have already filed for and received debt relief in the past, then the law places restrictions on when you may file again. For example, if you have filed for Chapter 7, then you must wait eight years to file for Chapter 7 again and four years to file under Chapter 13. If you have previously filed for Chapter 13, you must wait six years to file under Chapter 7 and two years to file under Chapter 13.
To learn more, consult a bankruptcy attorney like Robert Bruce Jones Attorney.