Filing bankruptcy seems like a nightmare for many individuals, but many people end up there because they are left with no other options. Getting lawsuits and horrible credit because of debts owed to creditors can be overwhelming, making the consequences that come along with going bankrupt seem worthwhile. There are two ways you can file bankruptcy, through Chapter 7 and Chapter 13.
Bankruptcy Law for Ch 7
In order to file for chapter 7 bankruptcy, you must live in or own a business or property in the U.S. If you’ve had a dismissed bankruptcy case in the past six months, you will not be able to file for Chapter 7 bankruptcy. If you’re eligible to file for Chapter 7, you are able to keep specified property.
Most of the time, liens on real estate mortgages and interest on car loans will not be erased. Liquidation of assets occurs to help repay creditors and the unsecured debts are discharged legally – some may survive. Some exemptions include child support, taxes owed on property and income taxes that are less than three years old. Even student loans and fines may be exempted. When you file Chapter 7 bankruptcy, it stays on your credit for up to 10 years. Sometimes bankruptcy is forced on the debtor by the creditor. Chapter 7 is usually a quick process.
Filing Chapter 13 Bankruptcy
Unlike with Chapter 7, Chapter 13 requires the debtor to devise a plan to pay back the creditors within three to five years. This too can stay on your credit report for up to 10 years. It is very hard to obtain additional credit without the allowance of the bankruptcy court, plus most lenders are weary of dealing with individuals who have bankruptcy of any kind on their record. The good thing about filing Chapter 13 is that you get to stop foreclosures (foreclosures are reinstated once the bankruptcy is completed) and discharge most debts. Learn more about how to file for bankruptcy.
