If you are drowning in debt and unsure how to get back on sound financial footing, then bankruptcy may be a prudent decision. Contrary to misconceptions, bankruptcy is not a punishment or sign of “giving up.” Instead, it is often the first step toward recovery, providing you with financial breathing room to get your life back on track.
Various federal bankruptcy laws were crafted specifically to help debtors recover from their financial problems. There are specific sections of the United State Code that outline the bankruptcy process and all actions are overseen by the United States Bankruptcy Court. There are many variations of bankruptcy, but the two most common forms--particularly for individual residents--are Chapter 7 and Chapter 13 bankruptcies.
Various federal bankruptcy laws were crafted specifically to help debtors recover from their financial problems. There are specific sections of the United State Code that outline the bankruptcy process and all actions are overseen by the United States Bankruptcy Court. There are many variations of bankruptcy, but the two most common forms--particularly for individual residents--are Chapter 7 and Chapter 13 bankruptcies.
Chapter 7 BankruptcyOften referred to as a “liquidation bankruptcy,” Chapter 7 cases are usually the best option for those who do not have a steady or sizeable income. In most cases, the debtor must surrender their non-exempt property, with the benefit of most debts being eliminated. The debtor can chose to keep certain debts or properties so long as they meet the exemptions stipulated by the bankruptcy code.
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Chapter 13 BankruptcyChapter 13 bankruptcy is slightly different from Chapter 7 in that it allows the debtor to “reorganize” the debts and propose to partially or fully repay creditors over a period of three to five years. The debtor is allow to keep all or some of their property, but this does not eliminate debt--just allows for a reasonable repayment plan.
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