You’re months behind on your bills. The creditors have left countless messages. You’re risking losing your home. But the fact is, you just don’t have the money to pay them. You’re bankrupt. What can you do? Should you contact bankruptcy lawyers? Although bankruptcy can seem like a scary situation, there is a way out. Declaring bankruptcy can allow you to manage your debt. Of course, there are consequences to declaring bankruptcy, but for some, it’s that last resort that can make a world of financial difference.
Chapter 7 and Chapter 13 Bankruptcy
If you’re asking yourself, “Should I file bankruptcy?” you should educate a bit on the types of bankruptcy. In general, when declaring bankruptcy, there are two types of bankruptcy available to individuals.If you’d like to have many of your debts discharged, Chapter 7 is for you. When your debts are discharged, you’re no longer liable for them, and the creditors (or whomever you owe money to) are restricted from making collection attempts on your delinquent accounts.Chapter 13 bankruptcy lets you to reorganize your debts. In other words, you can plan debt repayment, and if adhered to, most of your remaining debts will be forgiven.
Filing for Chapter 7 Bankruptcy
If you’re eligible to file Chapter 7 bankruptcy, you’ll want to hire Chapter 7 bankruptcy lawyers. Then:
- Fill out some bankruptcy forms, including the Statement of Financial Affairs, a document that requires debtors to list details about their assets, incomes, debts, and expenses, as well as addresses and names of their creditors. Then file it with the proper bankruptcy court.
- Next, the court will alert your creditors of your Chapter 7 filing, and they’ll be barred from making collection attempts
- A court-appointed trustee will seize your nonexempt property, including a second home, cash, second car, stocks and bonds. They’re sold, and the cash is distributed to your creditors.
- A 341 hearing is called where you’ll appear in court under oath and answer questions about your assets and debts from creditors and the trustee. Following, creditors have 60 days to object to your bankruptcy filing. No objections means the court discharges your debts.
Filing for Chapter 13 Bankruptcy
If you have money left over after your expenses are paid (i.e. steady or disposable income) then you’ll probably want to file for Chapter 13 bankruptcy.
- When you’re declaring bankruptcy and file for Chapter 13, you and your bankruptcy lawyers must develop a debt repayment plan detailing how you plan to repay many of your debts over three to five years.
- Once drafted, you must give the plan to a court-appointed trustee and, if approved, send to your creditors. If there are no objections, you’ll begin adhering and making regular payments to the trustee. With timely payments over the course of the plan, a court will forgive most of your remaining debts.
Debt That Remains After Declaring Bankruptcy
Some debt just won’t go away even after you file for Chapter 7 or Chapter 13 bankruptcy, including:
- Most student loans
- Fines owed to government agencies
- Your most recent back taxes
- Child support
Chances are, you’re in unfamiliar territory when it comes to declaring bankruptcy. With all the fine print involved with Chapter 7 and Chapter 13 bankruptcy filings, you may find the legal process quite daunting. Don’t let this stop you from achieving a brighter financial future. Bankruptcy lawyers are your partner— your trusted guide to handling your debt.