Each one of us wants to lead a debt free life but most of the times that is not possible because of increasing number of people using credit cards, shopping around for the latest technologies and in the process spending on anything and everything as if there is no end. Under such a scenario if there is sudden change in ones financial circumstance or some major crisis strikes the individual, the repercussion falls directly on the financial stature of the individual. Gradually the amount of debt increases and the person does not have any option other than filing for bankruptcy process to free him of excessive debt. One can file chapter 7 bankruptcy petitions or opt for chapter 13 bankruptcy payment.
Chapter 7 Bankruptcy Petition: A person filing for chapter 7 bankruptcy petition in the court will be absolved of all his debts once all his assets are turned over to a trustee who in turn sells off all the assets to distribute the amount between creditors. The creditors cannot come back to the debtor for further claims once the trustee has allocated a percentage of the proceeds of the person.
Chapter 13 Bankruptcy Petition: When a person files a petition in the court for chapter 13 bankruptcy, it requires him to chalk out a plan of action first and then disclose how he is planning to pay off his debts as per the rules under chapter 13 bankruptcy payment. The person can repay his debt from his income for a maximum period of 5 years but firstly the creditors, trustee and the court will have to agree to the schedule of repayment. Filing for chapter 13 bankruptcy stopped foreclosure hence enabling you to save your home. Many people opt for chapter 13 bankruptcy foreclosure plan as that helps them to retain their home, car or any other important asset.
However, before filing for the bankruptcy process one needs to be enlightened about certain facts so that hidden clauses do not come as surprises and the person is fully aware about his petition and the pros and cons attached with it. Let’s take a look at a few of the facts while filing personal bankruptcy.
When a person is allowed to file for personal bankruptcy under chapter 7 bankruptcy law, he will need to liquidate his assets to a trustee. However, in certain countries they may be allowed to keep certain property which is necessary for their survival. Property such as furniture, clothes, vehicles, a home, medical and dental necessities and in some cases insurance as well.
An individual can opt for chapter 7 bankruptcy petition for the next six years from the date of the first petition. In the case of filing chapter 13 bankruptcy payment, one can do it many times and at any point in time.
There are certain fees levied to individuals when they decide to file for bankruptcy. For chapter 7 bankruptcy filing fees is normally around $200 while for chapter 13 bankruptcy payment it is $185. The court does not charge higher for joint petitions.
There are certain debts which cannot be waived off as a part of the bankruptcy filing procedure. These include mortgages, loans acquired through fraudulent means, student loans, alimony and child support, taxes, large purchases of around more than $550 within 90 days of filing petition cash advances of around $825 within 70 days of filing bankruptcy and so on.
Attending the 341 court meeting where all the creditors gather to hear your case is a must. This meeting takes place normally after a month of filing the petition.
Filing for personal bankruptcy leads to a debt free scenario and it also stops creditors from harassing the individual under financial crisis. The trustee takes care of all your repayments after liquidating your non-exempt assets and hence, all you need to be careful of is the technical nuances of the legal proceedings which should not include irrelevant details under the bankruptcy process.
Raks Martin is a regular writer on bankruptcyonly.com, a US based portal, which provides detailed information on, and other bankruptcy related issues.
Raks Martin is a regular writer on bankruptcyonly.com, a US based portal, which provides detailed information on
, and other bankruptcy related issues.