Bankruptcy laws vary depending on which process you wish to file. Filing for bankruptcy is a federal process intended to assist consumers and businesses that are in debt. Filing for bankruptcy helps eliminate debt, or repay it. A few versions of bankruptcy exist to accommodate different situations. Bankruptcies can generally be described as "liquidations" or "reorganizations."
Whether you file for Chapter 7, Chapter 11 or Chapter 13, bankruptcy laws have numerous rules and exceptions regarding what kinds of debts are covered, who is eligible to file, and what property you can keep. There are also many bankruptcy law firms ready and able to assist you with this process.
Before filing for bankruptcy, consider the following:
1. Bankruptcy affects your credit score, although it's possible to rebuild good credit post-bankruptcy.
2. Bankruptcy is intended for individuals and businesses who have struggled to pay their bills, but cannot get ahead.
3. Bankruptcy law varies from state to state. Check your state’s requirements prior to filing.
Consider whether Chapter 7 bankruptcy laws meet your financial needsChapter 7 bankruptcy is called "liquidation." An individual's property may be confiscated and sold to pay back some of your debt. However, some types of debts can be eliminated in a Chapter 7 bankruptcy case. Some property is exempt under certain states' Chapter 7 bankruptcy laws, like clothes, car and furniture. A Chapter 7 bankruptcy lasts 3 to 6 months on average.
Ask about Chapter 13 bankruptcy laws if you want to pay back your debtsThe most common type of consumer bankruptcy is Chapter 13, or "reorganization." Under Chapter 13 bankruptcy, a consumer gets to keep all her property, but must pay all or some of her debt in monthly installments over a period of time; usually 3 to 5 years depending on the size of the debt. Under Chapter 13 bankruptcy laws, you don't lose property.
File Chapter 11 for your business bankruptcyUnder Chapter 11 bankruptcy laws, you don't have to close your business. You do, however, have to come up with a court and creditor-approved plan to repay your debts while you continue to operate your business. If a trustee is appointed to your case, the trustee takes control of your business and its property.
Find a bankruptcy law attorneyYou do not need to partner with bankruptcy law firms to file for bankruptcy. However, if you want the process to go smoothly, it may be wise to get one. If cannot afford a lawyer, check with your local legal aid office for a listing of bankruptcy lawyers who offer free representation.
- It is suggested that spouses file for bankruptcy together if they are both liable for the debts they want to release. Bankruptcy law information states that creditors may demand that the entire amount be paid by the spouse who didn't file.