Learning The Difference In Bankruptcy Chapters

Bankruptcy is a complicated process, but one that may be necessary for you to endure. Many things can lead to an uncontrollable build up of debt to the point where you are drowning. You could have suffered an extended length of unemployment or a serious illness. Someone could have died and left you with a financial mess. Regardless of the reason, you’ve determined the need to file. There are different bankruptcies and you must choose the right chapter.

A Chapter Seven is the most commonly used because it wipes out the debts you claim. Basically, you claim all debts, including anything financed with credit. There are some things that are not eligible under a Chapter Seven. Debts like injury judgments, back child support, and college loans cannot be included. Additionally, you are required to surrender any assets that are considered non-exempt, like the second car you are paying on or the second property you own. These assets are liquidated and used to pay off balances. Whatever remains will be discharged by the court.

A Chapter Eleven is used by businesses who need to deal with excessive debt but don’t want to close their business. Through this chapter, a company’s financial sector is completely pulled apart and restructured. The debt claimed is combined and repaid with a payment plan. The court will assign a term for repayment based on the company’s profits and expenses.

Chapter Thirteen bankruptcies are sometimes confused with a Chapter Seven. Under a Chapter Thirteen, debt claimed is not discharged. Instead, it restructures the debts, combining them into payments that are based on the filer’s income. You don’t have to surrender your assets. The court will determine, again based on income, the time you have to repay your debt. After you have completed your repayment plan, within either three or five years, your debt is then discharged.

There is also a chapter that is specifically designated for farmers and fishermen who use these means to support their family. In order to qualify for this chapter as a business, your company must be owned by a single family unit. For individuals, you must verify your occupation. Your total debt must not exceed certain limits and the ability to repay debts must be proven.

States have additional criteria for the bankruptcies. You may need to see an approved credit counselor within a certain time period, usually before your court date. Certain chapters will also require you to hire a lawyer because of the restrictions and complicated nature. This is one of the reasons why research is necessary.

Some people may not qualify for any of the bankruptcies. In these cases, you can try other ways to work with your debt. You can work with the creditors to arrange better terms for repayment. You can also talk with credit counselors to discuss other options. In some cases, a credit counselor can negotiate on your behalf or combine all of your debt into one payment you can afford.

You will need to research everything you can and contact a Bankruptcy Georgetown lawyer. It is important for you to know what steps you need to take. You also need to know what specific paperwork you will need to provide when you file.

If you have been searching far and wide for Bankruptcy Scarborough alternatives that fit your particular lifestyle and situation, then a visit to Killen Landau & Assoiciates is a must.

Source: BANKRUPTCY