Bankruptcy - Filing For Bankruptcy Chapter 7 & 13


A solution to money hardship can be found when you are faced with the situation of non-payable debts.

The ability to alter these debt obligations can be found in the United States constitution.

Individuals will at most times use chapter 13 and chapter 7 for bankruptcy. Chapter 7 mostly about removing the debtors liability through discharge, but there are exclusions. Chapter 13 is about applying a repayment plan for the debtor to repay all or some of the debt.

Clearing all or most of the debt under chapter 7, makes way for a new financial start.

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This type of bankruptcy is also known as liquidation or a straight bankruptcy, as your assets are sold or collected to repay some of the debt. These assets are non- exempt status, which can be readily converted into cash, savings and checking accounts are of this type.

The courts are directed by state laws, these determine what may not be used for distribution to creditors.

The non-exempt assets are distributed to your creditors and any debt which is left over is discharged, making you no longer liable. So the creditors or third party debt collectors can no longer attempt collection from you.

In order to qualify for chapter seven, a testing criteria is used to compare your average income must be below to that of a family in a similar position and from the same State area.

If you are unable to fulfill these criteria you will not be able to file for bankruptcy under Chapter 7. However, you can under Chapter 13. Once you have passed the means test, you will be ordered to take credit counseling from an approved credit-counseling agency

All or part of your debts can be settled within a period of five years in a Chapter 13 bankruptcy without accumulating any interest.

The repayment plan should be filed with your bankruptcy petition and you be expected to make payments into court immediately regardless whether the plan has been approved.

A court hearing will be held to approve your plan, in which the creditors can raise objection. The judge ultimately decides whether it will accept the plan. Your installments to court will be used to pay your creditors, up to the end of your plan any debts still remaining on your account will be released.

If you are unable to fulfill the means test of Chapter 7 or require use of some of your assets you can use Chapter 13 to claim bankruptcy.

Bankruptcy is a complex area of law, however there are companies out there that can help you to file for bankruptcy in your state at a fraction of the cost of an attorney.


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