Everything You Need To Know About Bankruptcy
If you are reading this article, or are contemplating filing for bankruptcy, then you will be no doubt be trying to find out every piece of information about bankruptcy definition so that you can make an educated and informed decision. Filing for bankruptcy will most likely be one of the most serious decisions you ever have to make, and one that will come with drastic consequences, at least for your short to medium-term credit score.
However, although your credit score is something you need to contemplate, there are numerous other factors that you should take into consideration which may outrank the devastating effect on your credit score. We have covered the different types of bankruptcy on other pages on our website, but if you are looking for a brief explanation about bankruptcy, and the options available to you, then this page will be the perfect place to start.
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What Is Bankruptcy and Why Should I Consider It?
Bankruptcy is a legal option, which is governed by federal law, designed to provide people in financial difficulty with relief from their debt obligations. Although there are several different types of bankruptcy types, you will not qualify for every option, because each bankruptcy case will have its own eligibility requirements and procedures which you must follow. If you are even beginning to contemplate filing for bankruptcy, it would be a wise decision to contact the staff at Bankruptcy Help for some help and guidance as to all of your legal options.
Chapter 7 - Although many people may not know the legal terms of bankruptcy, Chapter 7 is the one most people would associate with going bankrupt. Whenever you file for Chapter 7 bankruptcy, the process involves the liquidation of any non-exempt property, in an attempt to pay back any creditors with the proceeds. This could include your home, so it can have severe implications for both you and your family.
Chapter 11 – This bankruptcy option is a way for both individuals and business owners to press pause on their financial problems and then reorganize things to make them more manageable. Predominantly a Chapter 11 Bankruptcy is used by businesses or corporations, but individuals are also eligible to file for a Chapter 11 bankruptcy.
Chapter 13 – The second most frequently used bankruptcy type provides an opportunity for people who want to try and avoid having to sell their property wherever possible. It is only available to individuals and provided that they meet a set of eligibility criteria it is designed to help the debtor keep their property and repay their debts over a specified length of time using a court-approved repayment plan.
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How Long Will A Bankruptcy Report Affect My Credit Score?
Filing for bankruptcy has serious legal implications, and all bankruptcies are reported on your credit report as a matter of public record. Depending on the type of bankruptcy you go through, it will remain on your file for anywhere between seven and ten years.
Is It Possible To Recover Your Credit Score Following a Bankruptcy?
Although it will be a long and slow process, there are thousands of people who have successfully recovered from bankruptcy. The entire basis of bankruptcy is to allow people in financial difficulty to press the reset button and move forward with their life. However, it will take time and may not always be easy. Pay close attention to your credit report and ensure that everything is reported correctly. If you are subject to a Chapter 11 or Chapter 13 Bankruptcy, make sure you make every payment on time without fail. Keep your focus on the goal, and you can and will get there eventually.
Frequently Asked Questions
There usually are court costs associated with filing for bankruptcy. The costs will vary depending on the type of bankruptcy, and your current financial situation. At the time of writing, the cost of filing for a Chapter 7 Bankruptcy is $306 and for a Chapter 13 Bankruptcy $281, . Yet, some courts may also charge a more administration fee. The good news is that in most cases, it is possible to pay the filing fee in installments. Some courts may also waive the filing fee for a Chapter 7 Bankruptcy if you can prove that your income is below a certain level. And the federal courts decide not to allow you to pay the filing fee in installments.
Whether you use a company like Bankruptcy Help or an attorney, there will be additional costs or monthly payments involved including attorney fees, and it is standard practice to pay upfront for those services, particularly in a Chapter 7 Bankruptcy case.
Chapter 7 - Perhaps the most well known and severe type of bankruptcy. Typically, this takes between two and three months and involves the sale of your residential property to pay off your debts.
Chapter 11 - A highly complicated process, predominantly targeted towards business debtors, but for instance, it may be suitable for individuals with substantial debts and assets.
Chapter 12 - A type of bankruptcy very similar to Chapter 13, but exclusively available to family farmers and fishermen.
Chapter 13 - A court-supervised repayment plan which is designed to repay an agreed percentage of your total debt, over a period between 3 and 5 years. All cases in Chapter 13 refer to a form of payment plan. You will first have to evaluate the amount of loans you would repay as well as the money you wish to retain in order to decide the payment plans.
Chapter 7 and Chapter 13 plans are the most frequently used options; it is preferable to file a Chapter 13 in any case, as it enables the person filing for bankruptcy Bankruptcy Definition to retain their property, versus Chapter 7 where they must sell it to clear their debts.
The fact that you have filed for bankruptcy will be registered on your credit report. Once you filed for Chapter 7, then it will remain on the file for ten years, and for seven years if you filed for section 13. But, although obtaining credit will be more challenging, it will not prevent you from ever obtaining credit again in the future. So, before filing for bankruptcy, it is important that you seek help and legal advice.
There are hundreds or thousands of reasons why an honest worker might be in financial difficulty. The federal bankruptcy laws were designed to provide people with a second chance, and a fresh start. You can use the Bankruptcy Definition bankruptcy exemptions or the exempt property law to protect things that you will need to work and live. So, Bankruptcy Definition laws were also intended to ensure that all creditors are treated. Once you've finished the bankruptcy process, your creditors won't collect outstanding debts. And as a consequence, you are then able to move forward with your life.
Dischargeable debts are debts that can be eliminated after an individual file for bankruptcy. When a debt is said to be discharged, the debtor is no longer obligated to repay the debt, and the creditor is prohibited from trying to enforce payment. Need to understand that if someone else co-signed on an agreement, they would remain liable for the debt. Also, if the debt was a secured loan, where you agreed to use the property as collateral for the loan. Then your creditor may still be entitled to repossess the property, should you not repay the loan. If this is the case, it is best to talk to our helpful customer service team who will give you the right advice or information from a bankruptcy lawyer.