If you are considering the possibility of filing bankruptcy, it is likely that you are dealing with a financial crisis. Whether this was brought on by mishandling money or an unforeseen event that wiped you out financially, you need help getting out.
Bankruptcy may seem scary, especially if you have only ever heard bad things about it. The fact is, bankruptcy is a way that you can get a fresh start sooner rather than later. You may be concerned about some of the things you own being taken to pay off your debts. While this may happen if you file, it is not what you are probably assuming. Take a look at what might happen to your assets and property if you file for bankruptcy relief.
Chapter 13 Bankruptcy
Personal bankruptcy falls under either Chapter 7 or 13. The rules of each differ. Chapter 13 allows you the opportunity to repay some of your debt by establishing a plan with creditors. The trustee will negotiate to set up something that you can stick to for three to five years. Your income relative to the amount of your debt will dictate if you qualify for this type of process. Under Chapter 13 bankruptcy, you do not have to sell assets or give up property. However, while you will get some sense of relief from debt, you will still make payments for a while.
Chapter 7 Bankruptcy
Chapter 7 is a more radical approach to wiping out debt. During this process, a trustee is appointed who will negotiate the payment of some of your debt. The trustee will then get a full account of all assets in your name to decide what you will have to relinquish and what you will keep. You do get a say in most of these decisions. The trustee will likely recommend that those items you still owe money on, such as second vehicles, recreational vehicles, and second homes, are either returned to the creditor or sold to pay off the debt. The money you have in retirement accounts, health savings accounts, or trusts is not eligible for liquidation at a trustee’s behest. However, you may decide to withdraw funds if it means paying off debt. Ultimately, a Chapter 7 bankruptcy discharges a great deal of your debt because the likelihood of you having enough in assets to pay it all off is slim. Chapter 7 may be the way to go if you are looking for a quicker clean slate.
The decision to file bankruptcy is yours and yours alone. If you are on the fence about the route you should take, consulting with a lawyer, like a bankruptcy lawyer from Darrell Castle and Associates, PLLC, in your town might help.