Bankruptcy is a legal process where someone declares they cannot pay their debts. This means that creditors can take possession of their assets and sell them off to recover the debt. If you declare bankruptcy, you won’t be able to get credit cards or loans from banks.
Bankruptcy is a serious issue that affects millions of Americans every year. The good news is that it’s possible to file for bankruptcy without declaring personal bankruptcy. Learn more about the pros and cons of filing for bankruptcy.
How Does Bankruptcy Work?
The first step in bankruptcy is to fill out an application with the court. You must provide proof of your income and expenses. Your attorney will review this information and decide if you qualify for Chapter 7 or 13 bankruptcy.
Chapter 7 bankruptcy allows people to keep all of their property except for some exempt items such as clothing, jewelry, and household goods.
Chapter 13 bankruptcy requires people to repay their debts over 3-5 years. They are required to make monthly payments to their creditors while paying back the money owed.
What Are My Options For Filing Bankruptcy?
If you do not have enough money to pay your bills, you may want to consider filing for bankruptcy. However, there are many options available to help you.
You Can File For Personal Bankruptcy
If you don’t have any other options, you can file for personal bankruptcy. There are two different types of personal bankruptcies: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy is used by individuals who owe less than $1 million dollars to their creditors. In Chapter 7 bankruptcy, most of your assets will be sold at auction to pay off your debts.
Chapter 13 bankruptcy is used by individuals with a lot of debt. It is designed to allow people to repay their debts through a plan instead of selling their assets.
In both cases, you will need to complete a financial statement. This will include questions about your income and expenses. You will also need to list your current assets and liabilities.
Your attorney will then determine whether you qualify for either type of bankruptcy. If you qualify, he/she will file the appropriate paperwork on your behalf.
After you file for bankruptcy, you will receive a discharge notice. This document will tell you when you can start applying for new credit again.
You Can Avoid Bankruptcy With A Debt Management Plan
Another option is a debt management plan (DMP). DMPs are designed to help people avoid bankruptcy. People who use a DMP agree to certain terms and conditions. These agreements typically last between 1-3 years.
These plans are often cheaper than bankruptcy because they require fewer services. However, it is important to note that these plans are only available for consumers who have been declared bankrupt.