When you're considering filing for bankruptcy, one of the most difficult things to decide can sometimes be which chapter of bankruptcy would be the most appropriate for you and your situation.
A lot of people file chapter 7 bankruptcy and just have their debts wiped clean.
They get a fresh start that way, but they may also lose some or all of their assets, and not everyone is eligible.
For people who are earning steady wages, chapter 13 is often a much better option because it allows a person to come up with a plan to repay the debts that are owed.
Even if a person is self-employed, he or she can still file for this type of bankruptcy provided the liabilities fall within certain amounts.
By filing chapter 13 bankruptcy a person indicates that he or she is going to continue to pay back the debts that are owed - just not at the payment amounts and interest rates that are currently in affect.
There can be many reasons for this kind of bankruptcy filing.
A company may lose a large client, the economy may be struggling and keeping a person or company from doing well, especially if luxury goods are what is being sold, there may be a death of a key member of the company, etc..
Almost anything can cause a company or sole proprietor to end up in the kind of situation where he or she would need to file for chapter 13 bankruptcy.
However, you can't just run to the nearest lawyer and file.
Before you are allowed to file for this type of bankruptcy, you have to show that you have been to credit counseling, and you'll need to show that it's been within the last 60 days.
What kind of payment plan you have come up with is also something that you'll need to provide.
If you've done these things, you're ready to see a lawyer about filing.
It's not something that you should try to do on your own.
It might seem simple, but it's actually quite complicated.
You usually have between three and five years to repay the debts that are included in a chapter 13 bankruptcy, and most of the debts usually have their interest rates and sometimes also their principal amounts, adjusted so that they are easier to repay.
Payments must be made properly to avoid any further damage to one's credit, but if something serious and beyond the debtor's control keeps the debtor from completing the plan, a hardship discharge is also possible, which would be more like a chapter 7 bankruptcy proceeding.
A lot of people file chapter 7 bankruptcy and just have their debts wiped clean.
They get a fresh start that way, but they may also lose some or all of their assets, and not everyone is eligible.
For people who are earning steady wages, chapter 13 is often a much better option because it allows a person to come up with a plan to repay the debts that are owed.
Even if a person is self-employed, he or she can still file for this type of bankruptcy provided the liabilities fall within certain amounts.
By filing chapter 13 bankruptcy a person indicates that he or she is going to continue to pay back the debts that are owed - just not at the payment amounts and interest rates that are currently in affect.
There can be many reasons for this kind of bankruptcy filing.
A company may lose a large client, the economy may be struggling and keeping a person or company from doing well, especially if luxury goods are what is being sold, there may be a death of a key member of the company, etc..
Almost anything can cause a company or sole proprietor to end up in the kind of situation where he or she would need to file for chapter 13 bankruptcy.
However, you can't just run to the nearest lawyer and file.
Before you are allowed to file for this type of bankruptcy, you have to show that you have been to credit counseling, and you'll need to show that it's been within the last 60 days.
What kind of payment plan you have come up with is also something that you'll need to provide.
If you've done these things, you're ready to see a lawyer about filing.
It's not something that you should try to do on your own.
It might seem simple, but it's actually quite complicated.
You usually have between three and five years to repay the debts that are included in a chapter 13 bankruptcy, and most of the debts usually have their interest rates and sometimes also their principal amounts, adjusted so that they are easier to repay.
Payments must be made properly to avoid any further damage to one's credit, but if something serious and beyond the debtor's control keeps the debtor from completing the plan, a hardship discharge is also possible, which would be more like a chapter 7 bankruptcy proceeding.
SHARE
