During the legal process of bankruptcy, a business or individual can seek relief from debt, with the ultimate goal of getting a fresh start while making a good faith effort to repay creditors. Here, potential clients will learn more about the different consumer bankruptcy types.
Bankruptcy Filing for Individual Consumers
Consumers have two options when filing for bankruptcy; they can choose Chapter 7 or Chapter 13. Regardless of which type the consumer chooses, once proceedings are started, creditors are barred from further collection attempts until the process is complete.
Commonly referred to as liquidation bankruptcy, Chapter 7 starts when the client and Business Name submit a petition to the bankruptcy court. The petition must detail the person’s debts, assets and financial status. If the petition is approved, the court appoints a trustee who decides if any of the person’s assets must be sold to repay debt.
Many assets are safe during Chapter 7, and they are referred to as exempt property. These assets can include vehicles, primary residences, personal property, retirement accounts and life insurance policies. Some debts are discharged, but others cannot be eliminated, such as:
* Recent taxes
* Student loans
* Spousal and child support
* Legal fees
Once all debts are eliminated or paid, the process is complete. Chapter 7 is best for those who have no steady income and a substantial amount of exempt assets, as well as those who cannot follow a repayment plan.
During Chapter 13, a person can repay the debt over an extended period. The process begins when the individual or business files a bankruptcy petition that includes a detailed listing of assets and debts. Additionally, a bankruptcy petition must include a plan for the repayment of debt over the next several years. If the plan is approved by the court-appointed trustee, the debtor makes monthly payments for disbursal to creditors. Chapter 13 is typically best for those who want to keep their non-exempt property, and who have a steady source of income.
Do Filers Need a Bankruptcy Lawyer?
Whether one files for Chapter 7 or 13, bankruptcy is a complex process. It’s important for clients to Visit the website and be aware of the state’s bankruptcy laws, including those on exemptions. Business Name knows how to help clients while working within the law, and he can recommend the appropriate bankruptcy chapter.