Despite the fact that your credit will be negatively affected for the next seven to ten years, many people continue to believe that bankruptcy will enable you to be free of any unpayable debts. This is not always the case. Even if you file a Chapter 7 bankruptcy, also known as'straight' bankruptcy, you may ultimately be required to repay your debts. This is the bankruptcy option in which your property or assets are liquidated to pay off your debts. Although many believe that you will be debt-free after this proceeding, it is likely that you will have to repay at least a portion of your debts in the future.
Accordingly, if you fall into one of the following categories:
If your income is greater than the state's median income. If you earn more than the average person, you will be required to file for Chapter 13 bankruptcy, in which you will be required to turn over your income to a court-appointed trustee. The trustee will then use this income to pay your creditors. In most cases, you will not be able to choose how to manage your expenses, as the court may order you to avoid additional costs and pay your creditors instead.
If the creditors can demonstrate that you had fraudulent intentions, you will be compelled to repay your debts. They might be able to demonstrate that you never intended to pay them in the first place.
If you own assets, such as a vehicle or home, the bankruptcy court may require you to liquidate them to repay your debts. Likewise, this may be true of any investment you hold. Similarly, you will be required to liquidate your investments to repay your creditors.
If you own a second residence or vehicle, you will be required to sell them in order to repay your creditors.
However, there are restrictions that protect debtors, and you may not be required to sell your home or vehicle, but these are best explained by a financial counseling expert. A bankruptcy attorney can also advise you on the strategies to employ and options to consider, providing you with the best advice for your financial situation. It is always advisable to seek the advice of professionals if you wish to resolve your debts and financial issues in the most effective manner and avoid declaring bankruptcy.""
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