Thursday, August 25, 2011

The Bankruptcy Basics You Should Know

If you are having trouble maintaining payments or expenses of any sort and are contemplating filing for bankruptcy, you should understand the basics of bankruptcy. When you study individual bankruptcy options and start to learn what bankruptcy is all about, the data you gather will help you make your decision. Though talking with an experienced bankruptcy lawyer will help you make the final choice, knowing the basics will help you to find the right legal professional. When you choose the best lawyer, he or she will be able to help you through the form of bankruptcy you are qualified to file.

The two different types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 is used usually by people with restricted or no income. There's established levels of personal property that's exempt from being repossessed and sold through the bankruptcy court. Basically, an owned automobile, personal belongings and clothing are certainly not usually lost during bankruptcy.

There's a good possibility you will lose a car or home if you have loans on them, however. In these cases, the lien holder will recover the property that has been used as collateral for the loan. All other unsecured loans (credit cards, medical bills) will be eliminated in a Chapter 7 bankruptcy.

If you want to keep all of your personal property and meet income standards, you may need to consider Chapter 13 bankruptcy. With this type of proceeding, your entire debts will be consolidated into one payment amount. You'll make the payment to the bankruptcy court trustee, who pays your creditors. At first, your payments will be broken down among those with the highest balances. However, all of your creditors are going to be paid.

With a Chapter 13 bankruptcy, any past-due payments to your creditor, including utility bills and medical bills, will undoubtedly be included in the total amount you owe and will also be paid via the bankruptcy plan. Normally, the plan is going to be for a period of 3 to 5 years. If your wages are sufficient to supply basic living expenses and pay the monthly amount of the loan, you can get Chapter 13. If your income doesn't allow the minimum payment to be made, you are going to be rejected and need to file a Chapter 7 bankruptcy.

Bankruptcy isn't a good option for everyone. However, it might be beneficial for others. If you are interested in declaring bankruptcy, working with a qualified bankruptcy lawyer can help you have a much better chance at getting the bankruptcy approved.

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