The Fundamentals Of Bankruptcy
Unfortunately, there are many people whose financial situation has deteriorated so badly, they are now considering having to file for bankruptcy. As if like wasn\’t challenging enough, these same people must now go through a painful and confusing court proceeding to actually file. Therefore, this article is going to cover a few bankruptcy basics, as well as why you should use a lawyer when filing for bankruptcy.
Of course, hiring a lawyer seems to be a ludicrous idea. If you do not have any money, how is it possible to hire a lawyer? Hiring a lawyer will result in more bills, right?
The fact is that under the new bankruptcy laws, you must use a lawyer when filing for bankruptcy, regardless of whether your want to use one or not. While this may seem unfair, it is the law and there is no way around it.
Now that we know why you must use a lawyer, let\’s look at the two types of bankruptcy law that you can file under. The first is Chapter 7 bankruptcy and the other is Chapter 13 bankruptcy. While there are other chapters of bankruptcy, these two chapters are by far the most common.
People are usually most familiar with Chapter 7 bankruptcy. This is in essence where the court will sell off all of your assets. After the assets have been sold, the money gained from the sale is used to pay off your creditors. Any remaining debts are then discharged by the courts.
On the other hand, Chapter 13 bankruptcy is where the person filing the bankruptcy has to comply with a repayment plan. This plan, which covers a 3 year period, is designed to permit you to pay off your creditors. After the 3 years are over, any outstanding debts are forgiven by the courts.
Before concluding, it is very important to note that bankruptcy can not discharge two types of debt. These are taxes and student loans. Therefore, you really do need to be very careful when it comes to taking out student loans.
As you have seen above, bankruptcy can be a very useful tool, when warranted. As a note of caution, bankruptcy will remain on your record for up to 10 years. Therefore, you should contact a counseling credit company (make sure it is reputable and not a debt consolidation company) to explore your options before deciding to file bankruptcy.
This Bankruptcy EZine was established to help people learn about the various facets of bankruptcy.
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