Bankruptcy - Know Your Chapters

For most people, declaring bankruptcy is not something they plan on doing and the thought of it is even hard to imagine. If you are faced with the prospect of bankruptcy there are a few options under the bankruptcy statutes that are available to you. These options include chapter 11, 13, 7.

The general idea of entering a position of bankruptcy is to allow a person some relief from the financial pressure while they get things sorted out financially. The bankruptcy options most used are chapters 7 and 13. Consulting with your attorney is the best route to take to determine which option works best for your situation and work out a schedule of payment for the debt.

If your situation is such that you are going into the bankruptcy system, both chapter 7 and chapter 13 ensure that you won't be forced to pay further debt once you have completed your filings. Also, at this point your creditors will be issued a notice that they will no longer be able to contact you concerning your current debt.

As a part of the bankruptcy procedure, your financial situation will be reviewed and the court and payment schedules for your debt will be determined. They types of payments required from you will depend upon the type of bankruptcy you have filed. The nuances between the different types of bankruptcies will be discussed with you once you begin your consultations with your attorney.

Essentially with a chapter 7 filing you agree to have liquidated all of your disposable non-exempt assets. In other words, you turn them over to the court so they can be turned into cash to use against the debt that you owe. The court person responsible for the handling of this is known as the trustee. Once your assets have been sold for cash the funds are distributed amongst your creditors for payment.

As a part of the proceedings, you and your attorney will develop a list of all of your debt and the creditors to which the liquidated assets will be divided among.

This type of bankruptcy proceeding will affectively wipe out all of your debt except for any debt that is non-dischargeable. Again, the details and the options available via the bankruptcy courts is something that you should carefully consider and discuss with your attorney.

With a chapter 13 bankruptcy you will be allowed to make arrangements as a part of the filing to pay off your debts as best you can. Your attorney will evaluate your bankruptcy case and history ahead of you filing. Once the details of this type of filing have been completed you'll have 5 years to pay off your debt.

The key to filing for any type of bankruptcy protection under the law is to spend due time consulting your bankruptcy attorney. By doing this, you will be directed down the proper path of the bankruptcy filing.

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