Bankruptcy can be defined as the legal process that involves a business, or a person, acknowledging the fact that they are unable to repay the debts that they owe. All of the person’s assets are then measured and evaluated, and these assets can be sold off to help pay for the debts.
Chapter 7 bankruptcy, also known as ‘liquidation bankruptcy’ is when the individual sells all of his non-exempt property, or assets, to help pay the outstanding loans and debts. This form of bankruptcy can be filed by anyone, both individual and business, and there is no debt minimum or maximum to file this form of bankruptcy.
Chapter 13 bankruptcy, however, can apply only for those with a dependable income. In this form of bankruptcy, the individual can create a plan to repay the debts over a period of about five years. This means that the individual may not have to liquidate their assets or give up their property, as long as they can stick to the repayment plan.
Bankruptcy can be useful because it offers the individual a chance for a new beginning, and offers the moneylenders a chance to obtain some form of repayment, based on the individual’s assets. This means that once the bankruptcy proceedings are complete, the individual does not have any debt obligations, and can start anew.
One disadvantage to declaring bankruptcy, however, is that it can ruin your credit report – reports of bankruptcy can stay on your file for up to 10 years, making it harder for you to be able to ask for loans, or other such services.
One other advantage is that declaring bankruptcy will allow you to start rebuilding your credit, without the threatening shadow of pending debts. However, not all debts are wiped away when you declare bankruptcy. Student loans, alimony, and tax debts are still applicable, and you will still have to pay for these debts, despite declaring bankruptcy.
One benefit to filing for bankruptcy (specifically Chapter 7 bankruptcy) means that you can apply for bankruptcy exemptions, which means that you may be able to keep a few of your personal belongings, including your house. Another benefit is that your employer won’t be able to fire you if you file for bankruptcy, allowing you to be able to continue to earn a steady income, and build a better and stronger credit report for the future.
However, filing for bankruptcy can become very expensive. There are filing fees, bankruptcy trusty fees, attorney fees, and other such payments which can make this process become very costly.
Bottom and Associates, Ltd. can help answer any and all questions that you may have regarding bankruptcy. With a team of well-established and professional attorneys at your service, you can be sure that during the process of bankruptcy, your assets are secured, and that your rights as a citizen are not violated and that you will be treated with dignity and respect, despite your financial situation. Along with this, Bottom and Associates, Ltd. will be able to help you navigate the confusing maze of paperwork that bankruptcy filings can involve, and will ensure that you understand every single step of the process, so you can make the right decision.