Bankruptcy 101: What is Bankruptcy, Types of Bankcuptcy and How to File One.
Filing bankruptcy can help you reduce or eliminate debt, halt actions that creditors have taken against you and allow you to get your finances back on track. There are several different types of bankruptcy, and a skilled attorney can guide you on the most effective path to achieving a beneficial outcome for your financial situation.
The two most popular types of bankruptcy are Chapter 7 and Chapter 13. Bankruptcy stays on your credit report for 7-10 years, but your credit can be repaired by making responsible choices and remaining vigilant about properly managing your finances going forward.
Filing bankruptcy can put a halt to:
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is intended for consumers who are having financial difficulties but do not have the resources to pay their existing debts. Chapter 7 is best for lower-income debtors who have unsecured debt such as credit cards or medical bills.
When you file for Chapter 7, a court-appointed bankruptcy trustee will determine if you have any non-exempt property that can be sold to pay your creditors. He or she will also check to see if any recent financial transactions can be undone to repay your creditors as much as possible of what you owe them. If you do not possess any non-exempt assets such as cash or other valuable items, your creditors will not receive compensation for your debts.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is a total restructuring of debt for consumers who are behind on secured debts such as home mortgages and car loans. Debtors typically have enough income to pay back at least a portion of their debts through a repayment plan. The goal of Chapter 13 is to resume regular monthly payments and pay arrears over time.
Chapter 13 allows you to catch up on missed mortgage or car payments and possibly reduce payment amounts without forfeiting these assets. Creditors must be repaid within a period of five years. Once a repayment plan is successfully completed under Chapter 13, creditors cannot require you to pay them in full.
Chapter 11 Bankruptcy is typically filed by businesses, but individuals can file under Chapter 11 if they exceed the debt or income limits under Chapters 7 and 13.
Filing for Bankruptcy
Before you file for bankruptcy, it is essential to sit down and itemize your sources of income, major financial transactions, monthly living expenses, and all debts, assets and property. Gather all loan or mortgage documents, recent tax returns and deeds and titles to any real estate or vehicles you own.
Once you have collected this information, local bankruptcy lawyers can help you determine which assets are exempt from seizure. The attorney will file a petition and several other required forms at your Pennsylvania district bankruptcy court.
There are many different factors that must be taken into account when you consider filing for bankruptcy. Carosella & Associates’ seasoned legal team includes some very experienced bankruptcy lawyers in Pennsylvania. Our experienced lawyers will assess your case and guide you through the process every step of the way. To schedule a consultation, contact us today.