How Can Personal Bankruptcy Help Me?


Chapter 7 bankruptcy and Chapter 13 personal bankruptcy offer you various varieties of protection. If you're going through a financial crisis, a neighborhood personal bankruptcy attorney can help you determine whether Chapter 7 bankruptcy or Chapter 13 personal bankruptcy might be the correct answer for you.

Usually speaking, Chapter 7 bankruptcy is intended to wipe the slate clear by discharging unsecured consumer debt-debts like store credit, credit card debt, medical charges, and unsecured homeowner loans. Chapter 13 bankruptcy, on the other hand, is meant to give a consumer time to catch up past due installments over a period of 3-5 years, while keeping guaranteed possessions like homes and vehicles.

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What is Personal bankruptcy?

There are two kinds of consumer personal bankruptcy. Both are supposed to help consumers in monetary crisis, but the solutions given are very distinct.

Chapter 7 personal bankruptcy, or liquidation, is far more prevalent. Chapter 7 bankruptcy was intended to eradicate a lot of unsecured consumer debt (credit cards, medical bills, old energy bills, unsecured personal loans, and so on), and can commonly be finished inside of only a few months. In a Chapter 7 bankruptcy case, the trustee can liquidate (sell) non-exempt property to pay creditors, but many people who file for Chapter 7 personal bankruptcy don't possess any non-exempt property, and so are able to preserve their possessions while eliminating unsecured bad debts.

Chapter 13 bankruptcy is generally the answer of choice for people who have a number of guaranteed personal debt, such as car homeowner loans and mortgages, and wish to preserve the property that serves as security for the financial loans. In a Chapter 13 case, the consumer enters into a payment strategy that enables 3-5 years to catch up on over due repayments.

Given that the bankruptcy law modification in 2005, there have been a lot of misunderstandings about chapter 7. For instance, many people have been led to think that nearly no one can file for Chapter 7 anymore. That's basically not true. Though the new chapter 7 law that took effect in October, 2005 added some hoops for borrowers to jump through, personal bankruptcy attorneys and credit counseling businesses have discovered from the beginning that the Chapter 7 means check actually prevents very few borrowers from applying under Chapter 7. In reality, some credit counseling agencies have said that by the time a lot of debtors get to them for the newly-required pre-filing credit counseling, they have no other reasonable option! The safety net of personal bankruptcy is still offered to a lot of folks in financial crisis.


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