Types of Personal Bankruptcy.
No one wants to wind up in bankruptcy, but in some cases, it is the only option to get a fresh start – here are the basics.
First, there are two types of personal bankruptcy. Chapter 7 bankruptcy is where your non-exempt assets are liquidated to pay-off as much debt as possible and then the remaining balances are written off. Most often, your home, vehicles, and retirement accounts are exempt.
With a Chapter 13 bankruptcy, a judge will assess your situation and designate a trustee to establish a payment schedule to pay-off your debts. This chapter is normally used for people who are behind on their mortgage payments, back taxes or who have child support issues.
You will make payments every month until the debts are satisfied according to the court-approved repayment plan.
Once the payments are complete, any remaining balances are written off. Every filing requires a means test.
A means test is where your income level is compared to the median income in your state. This determines if you qualify to file and what type of bankruptcy you can elect. You’ll be required to go through financial counseling to receive a certificate before you file.
Chapter 13 bankruptcy can be a better option than Chapter 7 bankruptcy if you have assets that you want to protect. Filing for bankruptcy can stop the foreclosure process if the bank is trying to take your home.
A chapter 13 bankruptcy will stay on your credit report for 7 years. And a chapter 7 bankruptcy will stay on your report up to 10 years.
Having these negative marks on your credit report may make it difficult to qualify for loans and new lines of credit for a period of time, but it’s not impossible and you can take steps to rebuild your credit again.
To get started, simply fill out our form or better yet, call us now, and we’ll match you with the best solution for your situation. We are A- plus rated by the better business bureau and have helped thousands of people become financially stable.
So, don’t struggle any longer, give us a call. When life happens, we’re here for you.