Bankruptcy As A Viable Remedy For Your Debt Issues

A chapter 7 bankruptcy is often named as “liquidation of assets”. It is the most common form of personal bankruptcy as it allows consumers to discharge most unsecured debts. Unsecured debts are those debts which are without collateral, or you can say it which comes under the umbrella of “clean financing”. A chapter 7 bankruptcy is the fastest form of bankruptcy which provides debt relief to the filer in a few short months. However, in order to be eligible for chapter 7 bankruptcy, you must not have significant assets. You must be financially downtrodden, and unable to pay off the debts. Also, the sum of your debts must be greater than half of your annual income. Moving along with this, you must also have substantial unsecured debt which would take more than five years to repay.

On the contrary, chapter 13 bankruptcy which is also known as “restructuring the debt payment”. It allows the filer to keep the assets by restructuring debt payments according to the income. For filing chapter 13 bankruptcy, it is important that debt must be repaid over a period of three to five years. The main aim of filing chapter 13 bankruptcy is to become current on secured loans, for instance mortgaging the asset while resolving some outstanding debts. While, in chapter 7 bankruptcy, creditors attempt to collect their outstanding debt from co-signers. Even though one of the signers has been discharged from the debt payment through filing bankruptcy.

A key concern for those who consider bankruptcy is the ability to protect assets which include a home or car. If you are regular/current on your payments and the amount of equity for the loan is below the exemption limit. Then, the bankruptcy might allow you to keep your home or car. But, if the asset exceeds the exemption amount limit then the trustee might consider liquidating the assets to pay off the outstanding debts.

It is strategically important to know that not every debt is dischargeable. The non-dischargeable debts include child support, taxes, alimony, and student loan. Besides this, any such debts for death or injury caused by drunk driving also cannot be discharged. Financial hardship can happen to any person. Therefore, if you are being sued by the creditors, bankruptcy is the only viable solution that can provide you financial relief. It is important to consult an experienced bankruptcy attorney, ho can guide you and help you throughout the process. Remember, bankruptcy is not an admission of financial failure, rather it is a financial reset, which allows you to move forward with a fresh slate.