Disappearing Debt? What Declaring Bankruptcy Means For What You Owe
Unfortunately, it's not hard to come to the realization that you have more outstanding debt and bills than money coming into your account. Seeing your funds drain on a monthly basis can be frustrating and even scary, and coming to the decision that you need to declare bankruptcy is not an easy one for anyone to make. While it can seem easy to get into debt, often creeping up on you before you fully realize it, it can be very hard to get out of debt or even to know what to do when considering bankruptcy. As there are four different types of bankruptcy filings, individuals facing the decision for the first time find it easy to be confused about what to expect, especially about what the process means for their debt. Will successfully declaring bankruptcy rid you of all your debt, or will some debts still require payment?
Four Chapters, Disappearing Debt
Unless you're a farmer, you can cross Chapter 12 bankruptcy off your list of potential options. Chapter 12 is only available to farmers or fishermen, helping those two groups to get their finances back on the right track before they completely lose their family operation. Additionally, filing under Chapter 11 status is reserved for businesses that are struggling to make ends meet. By reorganizing money to avoid similar problems in the future, Chapter 11 applicants can keep the doors to their business open, without fear of losing it all.
The other two chapters of bankruptcy are more common because they apply to individuals and families. Each have their own set of pros and cons, so it's smart to meet with a lawyer, like Howard S. Goodman Bankruptcy Attorney, who can help you understand which condition suits you best:
- Chapter 13 bankruptcy is also known as "reorganization bankruptcy" because it allows you to keep your property, while setting up a payment plan for you to pay off your debt over a certain period of time. Because Chapter 13 includes a payment schedule, the court may not allow you to file for this type of bankruptcy if your income is too low or the debt too high.
- Chapter 7 bankruptcy is the most common type of bankruptcy in America, and it's not hard to see why-- filing successfully will effectively rid you of most of (or possibly even all of) the debt associated with your name. Of course, there is a catch: since all of your debt is being repaid by the trustee associated with your account, they have the legal right to seize and sell your unpaid property.