Basics Of Bankruptcy
The laws pertaining to bankruptcy were made for two reasons. On the side of creditors, this law ensures that creditors get some payments on the loan. Also, this law ensures that you start afresh as it gets to cancel a lot of your loans through a discharge.
There are two types of bankruptcy which are categorized in chapters seven and thirteen. For both bankruptcies, the provide solutions on how creditors can get pay. For chapter seven, you will need to give up some of your assets, though in theory form so that you can get a discharge of the debts which you have. The trustee will be mandated with paying your creditors. For chapter thirteen, you end up maintaining the ownership of your property. However, you will have to agree to a three or even five years payment plan. You will now end up getting a discharge for a large portion of those debts which are not catered for in the plan. For both cases, the creditors go ahead to stop initiatives for debt collection once you file a case. This is known as automatic slay. You will be relieved but on a temporary basis as you will have to pay the debt which is under the property that is secured.
What are the distinguishing aspects of chapter seven and chapter thirteen?
Chapter seven is basically a liquidation. In the model, a trustee has the liberty to put to sale a number of your property by the time you file the bankruptcy case. The money from the sale is now sued to offset some loans from the creditors. In most cases, there are no asses that you will have that are beyond what is required of you to keep hold by the law. In this case, you find out that most property cannot be put to sale in chapter seven cases. Once you file chapter seven case, a huge number of your loans will be ripped off after three months. You will now not be liable for paying those debts. This does not mean that you will have all the debts being offset. For child support payments that are already due, you will still get to pay for them.
For chapter thirteen, the situation is different. Under this chapter, there is a high possibility that you will keep your property. However, you will need to come up with a plan on how you will make payments for the debt within a given duration. The circumstances you are in will determine the amount you will need to pay your creditors. The amount should at least to total what the creditors would have received if you settle for chapter seven.
How do you know that you are eligible?
There is a limitation of chapter seven currently as opposed to the past. You should file chapter seven is you have a number of primary consumer loans that are already due. However, you will have your finances evaluated in order to find out whether you are in a position to pay off your loans.
Basics Of Bankruptcy