Chapter 13 bankruptcy is for people who wish to reorganize their finances and get back on their feet. The bankruptcy court examines their debts thoroughly and devises a """"repayment"""" strategy. Secured debts, such as mortgages and auto loans, are repaid before unsecured debts, such as credit cards. The plan's duration can range from three to five years. During this time, the debtor cannot incur any new credit obligations without the court's express permission. In addition, the bankruptcy ""black mark"" will remain on your credit report for 10 years.
Chapter 7 bankruptcy is also available to individuals, but it eliminates unsecured debts such as credit card and medical expenses. Certain exempt property, such as your residence and vehicle, may be retained, but other assets may be liquidated to repay unsecured debts. There are certain assets that cannot be discharged in Chapter 7 bankruptcy. These include child support, income and property taxes, student loans, court-ordered fines and restitution for any offenses committed by the debtor, and spousal support. Even though these debts cannot be discharged, they must be included in the bankruptcy documentation in order to provide the courts with an accurate financial picture. Once more, this information will remain on your credit report for 10 years.
Because filing for personal bankruptcy can be challenging, it is advisable to employ a licensed bankruptcy attorney. You are not required to hire an attorney. You can represent yourself in any bankruptcy proceeding. There are bankruptcy submission forms and online paralegal firms that specialize in guiding you through the process available online.
Remember that declaring bankruptcy is not a """"get out of debt free"""" card. Your creditworthiness will be negatively impacted for several years. If you file Chapter 13, you will be unable to obtain new credit for a minimum of three years. If you file Chapter 7, you will likely be unable to obtain credit for two to three years, and when you do, it will be at a significantly higher interest rate.
The Bankruptcy Laws are written to protect you, the individual, if you have no other options. If you need to file, or even if you just want to learn more about it, you should trust a knowledgeable attorney and heed to what they have to say. The majority of initial consultations are free.""
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