What Are The Different Types Of Personal Bankruptcy?
by Veeti Lepisto
Filing for bankruptcy allows you to put a stop to the never-ending debt you can't quite keep up with. It helps to resolve many personal debt issues, from mortgage payments to credit card bills. Here are the different types of personal bankruptcy you can file for.
About Personal Bankruptcy
Before you learn about the different types of personal bankruptcy, it helps to know exactly what it is and how it works. When you file for bankruptcy, you are able to relieve some or all of your debt. The type of bankruptcy you file for will determine if you pay back a certain amount of debt or have it erased, and if you lose any of your assets in the process. It helps with many debts, like credit cards, recent utility payments, and anything in collections. However, some debts, like medical bills, will not be affected and you still need to pay those bills on your own. Among the other benefits, comes the fact that you get a fresh start and will no longer be hassled by your creditors.
Chapter 7
A common type of personal bankruptcy to apply for is chapter 7 bankruptcy. This allows the majority of your debts to be discharged completely, while other debts are repaid with your liquid assets. Liquid assets might include money in your checking or savings accounts, so be aware that some of those assets will be used for repaying your debts. The money is distributed evenly to different creditors after you file for and are approved for chapter 7. The approval process varies based on your income and debt ratio, and your family size.
Chapter 13
Another type of personal bankruptcy you can file for is called chapter 13. Chapter 13 bankruptcy is more of a repayment plan as opposed to simply getting rid of your debts. You choose a plan that works best based on your income to debt ratio where you slowly pay your debts back. The difference between this and paying it on your own is that creditors stop harassing you. You will need to come up with an agreement that the court approves. The benefit of this type of bankruptcy is that not only are you paying back your debts, but you can keep your assets, like your bank accounts, cars, and home. It helps to have a bankruptcy attorney when you are attempting to create a repayment plan through chapter 13 bankruptcy.
To learn more, contact an attorney like Jeffrey S Arnold Attorney At Law P.C.
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About Me
Several years ago, one of my best friends married the guy of her dreams. This tall, quiet man adored my friend. Almost every week during their courtship, he presented her with a beautiful, fragrant arrangement of flowers. At the time, my friend’s mom joked that her home resembled a funeral home because of all of the flowers her boyfriend sent her. After the happy pair married, they purchased a new home together and quickly began running out of money, meaning that he could no longer afford to give her the flowers she loved. They even discovered they couldn’t afford to pay the monthly mortgage. After only a few years of marriage, they filed for bankruptcy. On this blog, you will discover the ways a reputable bankruptcy attorney can help you successfully recover from financial ruin.