If you are drowning in debt, you may feel like there is no way out of the situation. You are probably getting calls and letters from creditors on a daily basis and your
financial situation is causing you stress and sleepless nights. Bankruptcy is an option for those who have too much debt and need to find a solution. There are two main types of personal bankruptcy — Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy requires you to sell your assets to repay your creditors. In Chapter 7 bankruptcy you are allowed to keep some of your assets that are exempt. A trustee is appointed to oversee the collection and distribution of your property and assets. This is also known as liquidation. Once your assets are sold and distributed to your creditors, you are no longer responsible for those debts. In some cases, creditors will accept less than the amount currently owed in order to receive at least a portion of their money. You must meet the requirements to be able to file Chapter 7 bankruptcy.
Chapter 13 Bankruptcy
Those who have income to support debt payments may opt for Chapter 13 bankruptcy. In this type of bankruptcy, you will reorganize your debts with a payment plan to your creditors. With Chapter 13 bankruptcy you will not be required to liquidate your property to pay your debts. You can only file Chapter 13 bankruptcy if you have enough income to make monthly payments for a period of time, typically in three to five years.
How Bankruptcy can Help
Bankruptcy essentially provides you with a fresh start. You will resolve your debts and can start on the path towards rebuilding your credit. As soon as you file bankruptcy your creditors are no longer allowed to request payment. This means all of the harassing phone calls and letters will stop. Filing bankruptcy allows you a
period of time to get back on your feet financially. Although your credit will take a hit, you will be able to quickly start rebuilding your credit so that your score can actually go up. This may be a vast improvement over your current situation in which you are consistently late or missing payments.
Bankruptcy may be able to help you save your home from foreclosure. This is one of the main considerations you may have when choosing to file bankruptcy. The choice to file bankruptcy is entirely up to you. It is helpful to get legal guidance from an experienced bankruptcy attorney. Your attorney will help you choose the correct type of bankruptcy and assist in making sure that the forms are filled out and properly submitted so there will not be any delays or problems with your filing. Bankruptcy can be somewhat complicated, particularly if you have many assets or are married. It is important to make sure that you lose as little as possible in the process.
To learn more about bankruptcy and to get legal representation, contact our experienced bankruptcy attorneys at Moen Sheehan Meyer, Ltd. for a consultation.