Things We Should Know About Chapter 7 and Chapter 13 Bankruptcy
Bankruptcy is something that is feared by many people, especially in any bad economic situation. Job losses have caused many families to struggle and they are drowned in debts that they can’t repay. When things get serious enough, we could think that bankruptcy is the only viable solution as we are struggling to solve our financial problems. However, there are some misconceptions about bankruptcy that we need to debunk. There are more and more consumers in distress within our society and it is important for them to seek alternative solutions to eliminate debts quickly. People could be offered some programs, such as debt forgiveness and debt assignments. With enough effort, we should be able to get rid of any unsecured debt. In general, we should seek to free up enough cash to help us prevent any kind of default. When we file for Chapter 7 bankruptcy, it is possible to wipe out debts and we should be able to achieve the clean state status.
Chapter 7 Bankruptcy should make sense for people who are insolvent, such as unemployed individuals. These people could be affected by significant debts, such as marital problems, medical bills, car loans and other major financial responsibilities. However, not everyone is eligible for Chapter 7 Bankruptcy, but if we are approved, our debts will be wiped clean. We need to jump through many hoops to qualify. Consumers would be required to pass specific tests prepared by various financial agencies. In this case, consumers could be asked to join financial education and debt counselling classes. Business owners and individuals who seek to maintain their properties could file for Chapter 13 Bankruptcy. This protection should help us to repay our creditors, despite financial difficulties. With Chapter 13, we should be able to make structured payments, so it isn’t necessary to lose our assets. Payments could last much longer, but may not exceed 60 months. It is also a court-ordered settlement.
Also, only people who have regular income can be included in Chapter 13 protection. After being enrolled in Chapter 13 program, we should consider this as the last change and we need to make sure that we can follow all the repayment plans. There shouldn’t be any slip ups. We should try to do those steps properly, although we have been pushed into the corner financially. We should be aware that many people are not so lucky to be qualified for Chapter 13 protection. With bankruptcy protections, we should keep creditors from pestering us and we would be able to focus more on our core activities. However, we should be aware that Chapter 13 will stay in our credit record for up to 10 years. In reality, Chapter 13 is more about repayment plan, so it could be removed from our credit report more quickly than Chapter 7. If we choose debt forgiveness and debt assignment, the process could take up to 18 months. This should allow consumers to get the brand new start. However, we should educate ourselves before we make any kind of decision on bankruptcy.