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Types Of Bankruptcy
Bankruptcy is a procedure that is designed to relieve debt to consumers who have fallen on hard financial times and cannot afford to pay their existing debts.
While there are many types of bankruptcy out there, the most commonplace are chapter 7 bankruptcies and chapter 13 bankruptcies of the bankruptcy code.
Chapter 7 is the most common for the individual. It is the complete erasing of qualifying debt. The debtor is then released from all repayment obligations. But chapter 7 bankruptcies are not to be taken lightly.
While giving you an immediate fresh start in repairing your finances, it remains on your credit report for 10 years. You will be looked at as a high credit risk and financially irresponsible.
Chapter 13 is less harmful to your credit. Though there are still marks against you, since you will be working to repay your debts on a payment plan, you do not look like you are financially irresponsible, though you are still considered a slight credit risk. Also, your qualifying assets will not be sold with the chapter 13 bankruptcy like they would in the chapter 7.
In 2005 an act passed legislation that now makes it more difficult for individuals to receive a chapter 7 bankruptcies. There are now terms to be followed such as pre-filing credit counseling and post-filing financial education.
So when considering your file for bankruptcy, it is important to weigh the sides between chapter 7 and chapter 13. Which one will do you more harm than good when it comes to solving your financial problems?
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... before and after filing for chapter 7 bankruptcy. Pre-filing, individuals must complete credit counseling and post-filing, they must complete financial budgeting. These should have been implemented years before. They are designed to keep people aware of their spending and keep them on track. There is ...
... Establishing a budget is also key in the prevention of bankruptcy. You cannot spend what you don t have. Many people today have multiple credit cards and are in essence spending money they don t actually have, plus more for interest. So much so that people are paying off credit cards with credit cards ...
... creditors. Bankruptcy shouldn t be the first step though. Many people who find themselves in trouble immediately go to bankruptcy. First talk with your creditors and try to work something out. They would rather take payments than deal with the paperwork and money that goes into legal action that they ...
... fresh start immediately. Chapter 13, you will be making payments for three to five years. But, as stated before, you should only consider filing for bankruptcy when you have exhausted all other avenues. There are many various alternatives out there to be considered, but if none are practical for your ...
... the debtor is making payments on the owed monies, it does not have such a bad impact on the credit reports. But the individual does not have direct contact with the creditors and payments are distributed amongst them. To be eligible for the Chapter 13 bankruptcy an individual, even if self-employed must ...
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