filing for bankruptcy : What Are Your Options ?

2008-03-25 16:05:11

( Financial )



Have you ever asked yourself the question – should I file for bankruptcy? Well, filing for bankruptcy, maybe with the option of filing bankruptcy online – what’s that all about?

Are you in debt and do you want to find out what options are available to you. Well filing for bankruptcy should be considered when all alternatives have been exhausted. If your financial situation is complicated, consult a lawyer before proceeding.

This information only applies for a certain state – each state may differ in various elements of this law.

What exactly in filing for bankruptcy?
Legally speaking it gives you the opportunity to discharge certain debts to obtain a “fresh financial start”. But before filing for bankruptcy you should really assess the pros and cons.

Even the largest companies use bankruptcy laws to restructure or resolve their debt problems. You can use the same procedure to resolve your personal financial difficulties. You don’t need a minimum amount of debt to file for bankruptcy. The only requirement? – that you have debts.

If you are an individual other than a farmer – there are two main kinds of bankruptcy available to you:
- Chapter 7 (liquidation)
- Chapter 13 (adjustment of debt if you have a regular income).

There are some important differences between the two.

Chapter 7 or Chapter 13?
These two types of bankruptcies deal with different types of debt in different ways.

Chapter 7 – typically the debtor only has a few assets, and a lot of debt – largely credit card debt, hospital bills, store purchases and other dischargeable debt. How are creditors paid? If they are paid at all they are paid from anything owned by the debtor that is not exempt. Certain debts cannot be discharged in Chapter 7 – but can be in Chapter 13. What does dischargeable mean? It means that you are liable to pay certain debts if the court decides to grant a discharge.

Chapter 13 – is typically filed because the debtor is behind in mortgage, rent, car loan payment – or other secured debt. The debtor has a lot of debt which cannot be discharged under Chapter 7 or he has assets he wants to keep but cannot claim as exempt. Or you may want to protect a co-signer or spouse who is liable for your debts. The debtor pays the creditor out of his future earnings according to a certain plan. So the debtor must earn a regular income.


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