The Chapter 7 Bankruptcy

In its basic meaning, a Chapter 7 bankruptcy is a complete write off.  This means that all of your debt is released through liquidation.  Under this chapter, you surrender all of your property that is non-exempt.  Non-exempt property is the things that are included in your filing, like a car loan or home loan as well as credit cards and other secured and non-secured debt.  This property is then liquidated into cash that is sent to the companies that you owe money to.  Within four months from your bankruptcy hearing, you are free – or discharged – from the debt.  The whole purpose of a Chapter 7 filing is to provide you with a fresh start, with nothing on your credit except the bankruptcy.

The Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is different from a Chapter 7 bankruptcy.  In the Chapter 13, you are simply reorganizing your debts.  This type of bankruptcy is often described as being similar to a consolidation.  Here, you are agreeing to repay your debts over a certain period of time, usually between 3 and 5 years.  If you have property that you want to keep, like your car or your home, this is the bankruptcy that you should choose.  It is commonly chosen for people who are trying to avoid repossession or foreclosure.

Additional Information

There are new changes to the bankruptcy laws that have left many people thinking that any type of bankruptcy is not within their reach and they are stuck with their debt without a way out.  This is far from the truth.  Yes, it is true that there are more conditions to receiving your bankruptcy.  This should not dissuade you from filing if you need the help.  The changes that have been made are small, and merely in place to keep bankruptcy and credit abusers at bay.  For example, there is a requirement now that you must meet with an approved credit counselor before you can be granted a bankruptcy.

You should also know that a bankruptcy is reported on your credit for 10 years.  This does not mean that you will not have access to credit.  In fact, most creditors are eager to present credit to people who have filed bankruptcy because they have a clean record and no debt liabilities.  It is even possible to qualify for major loans, like mortgages, as soon as two years after you have filed bankruptcy.

There is a lot more information available about bankruptcy.  You should do your research thoroughly so that you have a better idea of what is best for you.  If you are in doubt, you should seek the aid of a bankruptcy lawyer.  Many will offer free consultations so that they can answer any questions that you might have and help you with your decisions.

Related Websites:

Click here for a Planeview (Long Island) Attorney for Divorce and Family Law – Elan Wurtzel

Click here for a Sarasota Attorney for Divorce and Family Law – Gary Jodat