Bankruptcy and debt can seem like a bad dream, something you hope and pray never happens to you or your family. But there are millions of Americans who have filed for bankruptcy and millions more who have massive debts that they’re struggling to pay off each month. What should you do if you find yourself in this situation? Should you try to negotiate with your creditors, refinance your debt, or just grit your teeth and keep paying? Read on to learn everything you need to know about bankruptcy and what options are available to you and your family if things get desperate.
What is bankruptcy?
Bankruptcy is a legal process that allows individuals or businesses to reorganize or restructure their debts. In the United States, there are different types of bankruptcy that are filed in different courts, depending on the jurisdiction. Filing for bankruptcy can be a complicated process, but it can also be very beneficial for those who are struggling with debt. When you file for bankruptcy, all of your assets will be taken into consideration by the court. The court will then decide how to best help you repay your debts. If you are considering filing for bankruptcy, it is important to speak with an attorney to ensure that you are making the best decision for your unique situation.
In some jurisdictions, bankruptcy is referred to as a fresh start law. The purpose of filing for bankruptcy is for debtors who cannot pay their creditors to discharge their debts and be given a fresh start financially. In most cases, when you file for bankruptcy your assets will not be liquidated in order to pay off your creditors. Instead, an experienced attorney can help negotiate a repayment plan that allows you to repay your debts over time while still allowing you some level of financial freedom.
In bankruptcy, a dischargeable debt is one that can be eliminated completely. This means that you will no longer be legally obligated to pay the debt. The most common dischargeable debts are credit card debts, medical bills, and personal loans. However, there are some debts that cannot be discharged in bankruptcy, such as child support, alimony, student loans, and certain taxes.
If you are unable to repay your debts, filing for bankruptcy may be one of your best options. The laws governing bankruptcy vary from country to country. However, in most countries there are two main types of bankruptcy: consumer bankruptcy and business bankruptcy. Consumer bankruptcies are typically filed by individual consumers who want to eliminate some or all of their debts. Business bankruptcies can only be filed by businesses or partnerships, though they can include individual shareholders who have invested in a partnership in some cases. Both consumer and business bankruptcies require you to file a petition with a court outlining your debts and proving that you cannot pay them back without sacrificing basic needs such as food or shelter.
Most debts are dischargeable in bankruptcy, meaning the debt is wiped out completely. However, there are some types of debts that cannot be discharged, such as child support, alimony, most taxes, and student loans. If you have non-dischargeable debts, you will still be responsible for paying them even after your bankruptcy is complete.
If you have non-dischargeable debts, your bankruptcy attorney can help you negotiate a payment plan with these creditors so that you don’t go broke trying to pay them back. If negotiations are not successful, your attorney may be able to petition for an exception on your behalf. For example, if you file for Chapter 7 bankruptcy and owe child support or alimony, your attorney may be able to get the court to allow you to keep up with those payments through a Chapter 13 repayment plan.
Chapter 7 vs. Chapter 13
When you file for bankruptcy, you must choose between Chapter 7 and Chapter 13. Chapter 7 is known as liquidation bankruptcy. That means the court will appoint a trustee to sell your assets and use the proceeds to pay your creditors. Chapter 13 is known as reorganization bankruptcy. That means you’ll work with the court to develop a repayment plan for your debts.
Before choosing a chapter, you’ll want to get a clear picture of your income, expenses and assets. Chapter 7 bankruptcy is right for people with regular income who want to get rid of debt quickly. This type of bankruptcy is used for unsecured debts like credit cards, medical bills and personal loans. You won’t be required to repay certain secured debts—such as mortgages—through a Chapter 7 filing. If you don’t have enough income left over after paying certain expenses—like your mortgage or student loans—you might need to file under Chapter 13 instead.
How do I get help with my bankruptcy case?
The first step is finding a bankruptcy lawyer who can help you navigate the process. Once you have an attorney, they will help you file the necessary paperwork with the court. The next step is attending the required meeting of creditors, where you will answer questions about your financial situation under oath. After that, you will work with your lawyer to create a repayment plan or negotiate a settlement with your creditors. Finally, you will attend a hearing in front of a bankruptcy judge, who will either approve or deny your case.
If you’re considering bankruptcy, it’s important to know that there are several different kinds of cases. The most common is a Chapter 7 bankruptcy, where you petition for discharge of your debts through liquidation. This can be particularly helpful if you have a lot of consumer debt, such as credit card debt or medical bills. There is also a Chapter 13 bankruptcy, which involves creating a payment plan for your debts under court supervision; an experienced attorney can help you determine which one is right for your situation.