There are a lot of situations and circumstances in one's life over which one has little or no control. This is a very serious situation and has to be treated as such. No one likes to admit that their financial situation has reached such a state where they are now actually considering declaring bankruptcy. The reasons could range from medical bills, a large credit card debt, redundancy or losing your job or due to some other factor like a divorce. Now that you have identified you position you would need to get some basic facts cleared before you take the next step.
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There are two types of bankruptcy which can define your situation. They are the chapter 7 and the chapter 13 types. Chapter 7 is a state where all your assets are liquidated to pay the debt and once that is done you are discharged for the debt that you claimed in the bankruptcy. The court supervises the selling of your collected assets and the cash is used to clear your debt. Some property can be retained under certain exemptions like your house and car. You don't fall in to a chapter 7 category if you have equity in the home which is worth a lot and because of which it does not fall into the exemption type.
Then you look at chapter 13 which will let you keep the assets you want to retain which do not fall in the chapter 7 exemption lists. For this to come into effect, a repayment plan has to be created by you to pay the creditors. This can be a monthly payment which can stretch from 3 to 5 years. Under this chapter you have protection from collection activities so long as you have stuck to your plan without missing a payment or the case will get dismissed.
The next thing to remember when deciding on the type of bankruptcy is that both types of bankruptcy are mentioned in your credit report and will remain for 7 years for chapter13 and 10 years for chapter 7. This has the same effect as any other adverse information on the credit report. This report is referred to for any services you may want to avail of in the future and it reflects your potential as a risk or a good investment.
You best option in case of a bankruptcy situation will be to consult an attorney and get the latest on the rules concerning this line of action. Laws differ in states and you must be informed of all the variances in the law and how they are going to affect you. While it is not a happy situation to be in, it can be resolved and you can bring back some sanity to your muddled finances and learn a lesson as well.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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