The word bankruptcy is often associated with failure, but in the United States, bankruptcy can be a tool for success.
Bankruptcy is when someone or some business cannot pay their debts owed to creditors. This may offer relief from debt and there are two types of bankruptcy: personal and corporate.
Personal bankruptcy allows you to discharge certain types of unsecured debt such as medical bills, credit cards, and personal loans. Corporate bankruptcy is when a business or company files for bankruptcy when they cannot pay their suppliers or employees.
However, there are many misconceptions about what this process entails which makes it difficult for people who need help to find the proper information that will allow them to file for protection under Chapter 7 or Chapter 13 of the Bankruptcy Reform Act.
As long as you can file your bankruptcy and pass the means test, your debts will be forgiven. You can start over financially without paying off all of your debt. This is a great opportunity for those who need help but do not know where else they can turn.
You are certainly not alone in this struggle or in this time of need.
The most common type of bankruptcy is Chapter 7 which allows you to not pay some or all of your debt if you meet the criteria for bankruptcy in chapter 7.
This is where it gets confusing. There are actually six types of bankruptcies that fall under this title depending on which section you file with.
Chapter 7 bankruptcy also has two different forms: liquidation and reorganization. Both forms of Chapter 7 require you to meet the criteria set out in the Bankruptcy Reform Act.
You can file for Chapter 13 bankruptcy if you have a steady income and want to pay off your debt over time while keeping your assets (such as a house).
If you enter into a Chapter 13 bankruptcy, the courts will order you to make monthly payments. Payments are approximately 30% of your disposable income for up to 60 months (five years).
These payments go towards paying back creditors and settling debts. If after five years you haven’t paid everything off, the court may allow you an additional five years to finish.
Eligibility to file depends on your income and the type of bankruptcy you qualify for under one of these chapters.
To find out which bankruptcy chapter will be best suited for your particular financial situation, there are many resources available to help you decide what type of bankruptcy is right for you including your bankruptcy attorney and the U.S. Trustee Program.
When you enter into a Chapter 13 or Chapter 7 personal bankruptcy, it should show up on your credit report as discharged debt that is no longer owed to creditors. It will not be marked as paid debt which can help improve your credit score over time. Likewise, it will allow you to finance items in the future.
However, it is important to be aware that while the bankruptcy should show up on your credit report as discharged debt, there are certain cases where creditors may still be allowed to try to collect from you or even sue you for payment.
If you have any questions about being sued for not paying a debt after you have filed for bankruptcy or if you think that your creditor may be doing something illegal, it is best to consult with an experienced bankruptcy attorney as this could land you in legal trouble.
It is not easy to file for bankruptcy and there are many misconceptions about what this process entails which makes it difficult for people who need help to find the proper information that will allow them to file for protection under Chapter 7 or Chapter 13 of the Bankruptcy Reform Act.
If you have questions about bankruptcy, your rights as a debtor, or if you just want someone to walk with through the process of filing for bankruptcy relief, you can consult with an experienced bankruptcy attorney to help you understand your legal rights.
While there are many options to consider when deciding what course of action will work best for you, remember that any form of relief from creditors or old debts could have long-term benefits on your life.
Your newfound freedom after getting rid of debt may lead to better financial opportunities later on down the road!
If you’re dealing with the potential of bankruptcy, give us a call. Our team will work to help you by reviewing all of the options our firm has available. We will ensure you’ll get the best possible outcome for your situation.
Get in touch today so we can start working on either halting bankruptcies or preventing them from taking place altogether!
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