Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors. Creditors may file a bankruptcy petition against a debtor ("involuntary bankruptcy") in an effort to recoup a portion of what they are owed. In the majority of cases, however, bankruptcy is initiated by the debtor (a "voluntary bankruptcy" that is filed by the bankrupt individual or organization).
There are two types of bankruptcy for individuals:
Chapter 7 - In a bankruptcy case under Chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for you giving up property, except for "exempt" property which the law allows you to keep.
In most cases, all of your property will be exempt. Property which is not exempt is sold with the money distributed to creditors. If you are behind on the payments on a mortgage or car loan, and cannot catch up on the arrearages, a Chapter 7 may not be the best choice for you if you intend to keep the property.
Chapter 13 - Chapter 13 is one method under the Bankruptcy Code to obtain relief from your creditors while, at the same time, providing a fair means to repay as much as you can.
It allows you to keep some or all of your property during the time you are repaying your creditors and it permits you to modify some contract payments and interest rates. Repayment plans usually cover a period of three to five years.
Chapter 13 is for individuals with regular income who voluntarily come under the protection of the court with debts below a certain dollar amount. A Chapter 13 petitioner must be able to remit a monthly payment to the Trustee and still cover ongoing living expenses.
Under both of these bankruptcy types, petitioners are able to keep some or all of their property, depending on a number of factors that the bankruptcy attorney can help you to understand.
If you are interested in consulting with a bankruptcy representative from The Law Firm of Annette Triplett-Beasley, LLC, please fill out the following form and submit it and a representative will call you to schedule an appointment.
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