Bankruptcy Basics


Chapter 7 Bankruptcy Basics

Bankruptcy laws were developed to help people who find themselves in a difficult situation due to overwhelming debt they cannot pay. A Chapter 7 bankruptcy allows you to have your debts discharged and begin to rebuild your financial health. In filing a Chapter 7 bankruptcy you may discharge most types of debt, such as credit card bills, personal loans, medical bills, and utility bills. However, there are certain types of debts that are exempt from bankruptcy laws and cannot be discharged including but not limited to: most state and federal tax debt, child support, alimony, and student loans.
 
One advantage of filing for bankruptcy is that all creditor calls and collection action will cease. Even though your bankruptcy may take several months to be finalized, the harassing calls and other collection activity will stop once your bankruptcy is filed. When your Chapter 7 bankruptcy is finished, you will receive a Discharge from the bankruptcy court. Once you receive your Discharge, you will no longer owe the discharged debt.


Chapter 13 Bankruptcy Basics

Filing a Chapter 13 bankruptcy is a way for individuals who are employed to gain additional time to pay off creditors. Chapter 13 generally allows a debtor to keep property and pay debts over time, usually three to five years. A Chapter 13 allows an individual to develop a plan to repay all or part of their debts. During this time the law forbids creditors from starting or continuing collection efforts. Instead, a Chapter 13 an individual makes monthly plan payments to a Chapter 13 trustee who distributes payments to creditors.

Stop a foreclosure!

Chapter 13 offers individuals an opportunity to save their homes from foreclosure. The filing of the Chapter 13 petition immediately stops foreclosure proceedings and allows the individual to catch up on their delinquent mortgage payments over time. Nevertheless, that individual must still make all mortgage payments that come due during the Chapter 13 plan on time.

 

 

 

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