Have the Best Understanding of What Happens When You File Bankruptcy

Chapter 7

Filing bankruptcy can be a scary feeling, and most of us do not know what happens when you file bankruptcy. There are a few general pieces of knowledge you can read about, but the best thing to do is consult a bankruptcy attorney. Your bankruptcy lawyer can give you the best advice for your specific case.

Although national bankruptcy filings fell by around 182,000 from 2010 to 2011, it is still a reality for many Americans. Currently in the U.S., one out of every 70 households files for bankruptcy. If you feel that you need the fresh start of filing for bankruptcy, you must know which chapter you are going to file, and also that it will not wipe out all of your debt completely.

What happens when you file bankruptcy will depend on what chapter of bankruptcy you file. Chapter 11 bankruptcy is probably the least common type of bankruptcy an average person would file. This law is reserved for businesses that need time to reorganize and pay off their debt, while remaining in full operation.

Filing chapter 7 bankruptcy is a more common way for an individual to get themselves back on track. Chapter 7 bankruptcy is also known as liquidation because your assets will be taken and sold to help pay off debtors. Once your major assets have been liquidated, you are left with no unsecured debt. It is important to research chapter 7 bankruptcy information because you will have to pass a means test, and you will be left with some secured debt like student loans.

Another bankruptcy option for the average American is chapter 13 bankruptcy. What happens when you file bankruptcy under this law is slightly different than under chapter 7. When filing chapter 13 bankruptcy, you will not be liquidating your assets, but will be reorganizing your debt. Chapter 13 is an option for debtors with unsecured debts, mostly credit cards less than $1,081,400, along with secured debts of less than $360,475. The court will pay off your debtors, and you will pay a monthly fee to a trustee. This bankruptcy typically lasts 3 to 5 years.

No matter what chapter of bankruptcy you choose to file, there is a lot of paperwork and deadlines to meet. The best option to get the most from your bankruptcy is to research bankruptcy lawyers near you. They can fully explain what happens when you file bankruptcy and what options are best for your personal situation. Begin calling a few bankruptcy attorneys today, and see what they have to offer. Find more.

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