Definition of Personal Bankruptcy
If you do not have the foggiest idea how to cope with all those debts and you are simply overwhelmed with your current financial situation, filing for bankruptcy may turn out to be the only solution to this problem. This is an efficient toll in situations when you owe more than you can afford paying out. On the one hand it is rather hard to decide filing. People try to handle with situation by all means. Unfortunately, they are not always successful. This is when you will probably need efficient legal mean such as filing for personal bankruptcy.
Reasons for Declaring Personal Bankruptcy
There can be wide range of reasons which make people turn to declaring bankruptcy. Sometimes we suffer from unexpected costs which can be related to urgent medical help, purchasing of house or car, etc. At the same time some get fired in the most unpleasant period of time when they have already borrowed money or obtained credit cards. There can be various reasons that make it rather hard or even impossible to pay the bills. It means that it is high time to consult professional personal bankruptcy attorney who will help you to choose the most appropriate type of bankruptcy that will be a perfect solution to all your problems.
How it Works
There are two types of bankruptcy which include Chapter 7 and Chapter 13 bankruptcy according to personal bankruptcy law. These Chapters are different. Some people mistakenly think that they are almost the same. It’s not true. Chapter 7 is more likely to meet requirements of debtors who are absolutely hopeless in their financial needs and debts. It also involves people with small level of income which does not make it possible for them to make all necessary payments. The main idea of this Chapter is that it liquidates major part of your debts preventing you from collecting efforts made by creditors. You will be no longer responsible for your payment after you filed for Chapter 7 bankruptcy.
Chapter 13 includes reorganizing and establishing of new repayment plan. It will be the best bet for those who still have some property or additional income in order to cover their debuts. However they need some time for a fresh start. This Chapter also helps to discharge some of your debts. However some of them will not be wiped out.
One of the main features which make declaring personal bankruptcy rather common nowadays is the fact that it protects debtors from collectors. No matter what type of bankruptcy you choose, creditors will not be able to demand or collect any payments from you. Court will assign a trustee who will deal with all your assets which can be sued to cover compensation to creditors. Before filing you are recommended to consult personal bankruptcy lawyer. He will describe all possible benefits and drawbacks of both types and help you to decide which one will be the most appropriate in your particular situation.