Most of the people think that bankruptcy is simply the process people go through to get rid of paying their financial obligations. However, new bankruptcy laws make it more difficult for some persons to do this through bankruptcy. It simply means that more individuals have to try to repay their debts, even with bankruptcy protection.
Commonly bankruptcy laws are established to help people who can no longer pay their creditors and get a fresh start by liquidating assets to pay their debts or through a repayment plan and protect troubled businesses. Most bankruptcy cases are filed under the three main chapters of bankruptcy code namely; Chapter 7, Chapter 11, and Chapter 13.
Bankruptcy is actually very complicated. Have you ever asked yourself what is the difference between Chapter 7, Chapter 11, and Chapter 13? Come and let’s take a look.
Chapter 7 bankruptcy explained
It is often denoted as the “liquidation” bankruptcy. It generally allows the debtor to eliminate debts without repaying them. This type of bankruptcy is usually reserved for individual debtors, not those who run businesses or businesses themselves.
Under Chapter 7 Bankruptcy protection, a trustee is appointed to the filer, and is responsible for ensuring that any assets that are secured and can be sold are sold – and that the proceeds from the sale are given to the specific creditor that secured the purchase in the first place.
If you have a high amount of consumer debt that you cannot get rid of, this could give you the chance to start over. If you are wondering whether or not you qualify for Chapter 7, you can choose to speak to a lawyer for more information.
Usually if the court finds the individual did not produce adequate financial records, committed a crime of perjury, unable to explain loss of assets, concealed, illegally transferred property to try and move it out from the estate and failed to complete a financial management course as required of all debtors filing bankruptcy, an individual may be denied debt discharges under Chapter 7.
Chapter 11 bankruptcy explained
It is denoted as the “rehabilitation” bankruptcy. The individual or business can file for Chapter 11, in other words the creditors may involuntarily file for the debtor in certain situations. Usually Chapter 11 is filed by corporations or other businesses rather than individuals.
Under Chapter 11, debts are reorganized to allow the individual or business a better chance of repaying them. The creditors are contacted to get different terms on any loans and interest rates may be lowered. The amount of time you have to repay a debt may be extended to make the monthly payments lower and hopefully, easier to manage. A trustee is appointed to supervise the assets but nothing is sold at this time.
This will not allow you to get rid of your debts, you are just simply restructuring and changing the terms of the debt and making plans to pay it back continuously through future earnings.
Chapter 13 bankruptcy explained. It is also called a “wage earner’s plan” bankruptcy. It enables the individuals with regular income to develop a plan to repay all or part of their debts. The debtors propose a repayment plan to make instalments to creditors over three to five years.
Under Chapter 13, the individuals will have an opportunity to save their homes from foreclosure. This may help solve delinquent mortgage payments over time, it allows individuals to reschedule secured and extend them over the life of the plan. Doing this may lower the payments.
You have to file a petition under the bankruptcy court serving the area where the debtor resides. The debtor must also file with the court the schedules of assets and liabilities, schedule of current income and expenditures, schedule of executory contracts and unexpired leases and a statement of financial affairs.
Providing solution to those in need of debt help is just few clicks away from you. You just need to fill out a form and speak to a debt consultant and bankruptcy help may reduce your monthly payment. Bankruptcy information will provide you options to reduce your monthly owe and get out of debt and avoid the long term negative consequence of bankruptcy. Make a move now and get rid of all dischargeable debts.
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