There are two types of bankruptcy: voluntary and involuntary. Voluntary bankruptcy is when you file for bankruptcy yourself, while involuntary bankruptcy is when your creditors initiate the process.
There are two alternatives available regarding voluntary bankruptcy. You have the option of filing for chapter 7 or chapter 13 bankruptcy. These are your choices, so you should be well-informed before filing for bankruptcy.
If you are granted chapter 7 bankruptcy, you will be required to surrender your properties, or at least those that were not exempt under the law. These assets will be turned over to the trustee, who will liquidate them and use the proceeds to pay off your creditors. Even if you own enough property to pay off your debts in full, they will still seize it and use as much of it as possible to pay your creditors. After this procedure, your debts will be discharged, and you will no longer be responsible for them.
In contrast, when you file for chapter 13 bankruptcy, the process is identical with one exception. You must repay a portion of your unsecured loans and other debts prior to their discharge. All of this will hinge on the court's decision, and they will consider your future financial capabilities.
Whether you file for chapter 7 bankruptcy or chapter 13 bankruptcy will depend on your financial situation and debts. When you are so deeply in debt that no other option can assist, either option can be extremely beneficial.
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