The decision to declare bankruptcy is never an easy one. With the current troubled state of the economy, more and more people are being left with no other choice than to file paperwork and get their debts under control. There are a lot of factors that go into making the decision to file, and the consequences can be long lasting.
Because of this, those who decide to declare bankruptcy should always seek the assistance of experienced specialized attorneys to help with the paperwork and knowing which chapter is the correct one to file under for their specific situation. However, it is a good idea for people who file to understand the basic differences between the most commonly filed chapters prior to seeing their attorney. Below are a few descriptions of the most common chapter filings.
This chapter allows, under federal law, the person or family filing to make a fresh start financially. By filing using this option, most unsecure debts, such as credit card debt, personal loans, medical expenses or judgments from car accidents, can be eliminated.
Because people who file under this chapter are eligible for a fresh financial start, they are also able to keep their home, vehicle and assets. Also, after filing, creditors and debt collectors are no longer able to legally call and harass those who previously owed money. Although interest rates may be higher for people who apply for loans or credit cards after filing, there are few long-term consequences associated with this filing under this chapter.
Those who have regular income and unsecured debts under $360,475 are eligible to apply for this chapter option. Because this option is filed locally with a city or state district, it requires more details regarding current assets, debts, incomes and expenses. The court will typically provide financial planning assistance and renegotiate debts to help the person filing pay off these debts over a period of three to five years.
This choice is beneficial because it allows the person filing to save themselves from having to file for foreclosure. With this chapter, the same law against allowing creditors to call and harass those that are in debt is also in place.
When it comes time to begin the paperwork, it is important to sit down with an expert to determine the right path to take. Experts in this type of law will make sure you file correctly, and have the fewest complications after the paperwork is final.
