It’s not uncommon for families and individuals to carry a certain level of debt. However, in some cases, that debt can spiral, and it becomes almost impossible to meet the minimum repayments, let alone start to pay it off.
In these cases, bankruptcy is a legal process, where individuals or other entities that cannot repay their debts seek relief from those debts. Depending on the type of bankruptcy you file for, this process can allow you to write off a portion of your debt, or create a plan to pay off some or all of your debt.
For people who are struggling with debt, the different options available to them through bankruptcy allow them to regain some control over their lives and find a way to pay of a portion of their debt.
The most familiar forms of bankruptcy for individuals are Chapter 7 and Chapter 13, which each offer people a slightly different way to relieve their debt.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy offers people what’s known as a fresh financial start. Chapter 7 is often known as “liquidation,” but depending on your circumstances, you may not have to lose your possessions.
A trustee is appointed by the courts to sell some of your assets in order to pay off a portion of your debts, with the remaining debts being wiped. Lots of personal assets are exempt from this process, so it’s not a case of losing everything.
What Types of Debt Does a Chapter 7 Bankruptcy Deal With?
A Chapter 7 bankruptcy can wipe out a variety of debts, including credit card debts, medical bills, utility bills, personal loans and some types of IRS debts.
When people are struggling to pay off these debts, it can be difficult to stay ahead of the interest and actually start to pay off the debt. In these cases, Chapter 7 bankruptcy offers a route to relief from these debts.
Do I Need an Attorney to File for Chapter 7 Bankruptcy?
In most cases, it’s not necessary to have an attorney file Chapter 7 bankruptcy for you. However, when making such an important filing, it can be invaluable to know that everything has been filed properly, and the best way to do that is to have an attorney do it for you.
Filing for bankruptcy is a complicated process, and if you have a Bankruptcy Attorney file for you, then you have a skilled professional to protect your interests.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy allows you to pay off your debts through a court-ordered repayment plan without having to liquidate your assets. Depending on your situation, you may pay off the entirety of your debt, or you may have a portion written off.
The Chapter 13 payment plan is spread out over a period of 3-5 years, which might seem a long time, but this option offers a manageable way to become debt-free in that time.
What Types of Debts Does a Chapter 13 Bankruptcy Deal With?
Like a Chapter 7 bankruptcy, a Chapter 13 bankruptcy deals with a variety of debts. Common debts that a Chapter 13 deals with are mortgage repayments, car loans, IRS bills, credit card bills, medical bills, utility bills, and so on.
A Chapter 13 payment plan can offer a credible way to pay off your debts at a time when you can’t see any path to repaying it.
Common reasons for Chapter 13 Bankruptcy include being behind on mortgage repayments and having an annual income that is above the Chapter 7 limit. In these cases, Chapter 13 is a common choice.
Do I Need an Attorney to File for Chapter 13 Bankruptcy?
Similar to filing for Chapter 7 bankruptcy, it’s extremely helpful to have an experienced attorney help you file for Chapter 13 Bankruptcy. There are lots of forms that need filling out correctly and strict deadlines that need to be met. If you’ve got a good attorney, then you know it’s going to be filed correctly, but if you do it yourself, you run the risk of making mistakes.
Whatever legal issue you have, it’s always advisable to have an experienced attorney on your side, fighting your corner, and filing for bankruptcy is no different. Attorneys are there to help protect your rights and interests, so it’s always advisable to have an experienced attorney on your side.
Filing for bankruptcy is a difficult decision, so you want to know that you’ve got someone on your side who can give you the best advice.