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Bankruptcy
Bankruptcy is a federal court process that helps consumers and businesses to eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcy is an option that is mainly considered when an individual cannot pay debts as they are due.
Bankruptcy is not something that eMoneyStation can enthusiastically recommended. Â Along with a divorce, bankruptcy is listed in the top 5 life-altering negative events that we can experience, along with severe illness, disability, and loss of a loved one. In its essential form, bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors.
Chapter 7 bankruptcy provides for the discharge, or elimination of, unsecured debts in order to start financial recovery. Chapter 13 bankruptcy provides a repayment plan for secured debts, such as a home mortgage. There are pros and cons to each of the consumer bankruptcy options, as well as personal financial circumstances that might limit your options.
Because it completely eliminates your unsecured debt, Chapter 7 bankruptcy is the simplest way to come out of debt. Â In a bankruptcy case under chapter 7, you file a petition asking the court to completely discharge your debts. Chapter 7 relief is an option that is available only once in any eight year period. Chapter 7 bankruptcy, sometimes referred to as total bankruptcy, remains on your credit report for 10 years.
Chapter 13 bankruptcy is more like a payment plan and it remains on your credit report for seven years. Chapter 13 bankruptcy is the most common type of "reorganization" bankruptcy for consumers. You can keep all of your property, but you must make monthly payments over three to five years to repay all or some of your debt. The specific amounts of your repayment are determined by the courts.
Although bankruptcy can help with your financial situation, it does not help in every circumstance. Debts that are not eligible to be discharged include child support payments, some taxes, and student loans. Debts that can be discharged include personal loans, credit card debts, and medical bills.
Filing bankruptcy is a very serious move, and you must consider your bankruptcy options in comparison to your financial future.
Common Questions
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