There are two primary categories of personal bankruptcy petitions. Chapter 7 bankruptcy is a comprehensive debt discharge, whereas Chapter 13 bankruptcy is a reorganization. Each form of bankruptcy has unique procedures and results.
It is essential to observe that the choice of which chapter to file is not up to you. Obviously, most people would prefer to file chapter 7 and have their debts eliminated, but the court, based on your financial situation, makes this determination, not you. If you decide to file for bankruptcy, it is in your best interest to have a qualified attorney manage the paperwork, as they are aware of what the courts require to be included.
Chapter 7 is a complete discharge of debt by the court. You must file all of your debts with the court, and if you are granted bankruptcy, all of your debts will be discharged. It is not as appealing as it sounds. When you file for this form of bankruptcy, the court will appoint a clerk to review your income and assets. Prior to the proceedings, they will personally catalog all of your personal property and determine what must be sold to repay some or all of your debts. State-specific laws determine the value of the personal property you are permitted to keep. This includes items such as your wedding jewels and family heirlooms and can be as low as $1,000.
You must also be aware that certain categories of debt cannot be discharged through bankruptcy.
Chapter 13 bankruptcy is comparable to chapter 7 bankruptcy. The difference is that in this form of filing, you attempt to negotiate new repayment terms with your creditors. Most individuals who file for reorganization bankruptcy do so in order to retain their home. In addition, the court will appoint a clerk for this form of case. They will evaluate your debt-to-income ratio and determine which assets or possessions must be sold to pay off your unsecured debt. This clerk will consolidate your debts and determine the monthly payment amount required to settle them. If you are granted bankruptcy, you will be required to pay the court this sum each month to cover your debts. The court will not consider anything other than repayment when determining this amount.
There are additional options available to assist you in resolving your debt issues. You should have a thorough understanding of all the issues associated with personal bankruptcy. Bankruptcy will ruin your credit for many years, and the results of the debt forgiveness may be worse than your current difficulties.""
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