There are several reasons that a person may choose to file for bankruptcy. For many individuals, it’s the inability to pay off mounting debt resulting from large medical expenses, overextended credit, unemployment, or some other reason that has brought them to this point. When the creditors keep calling and threatening letters are an everyday thing, bankruptcy provides the legal means for putting an end to the harassment.
Bankruptcy protection gives an individual a legal way to discharge a debt or make supervised payment arrangements with the court. To file for bankruptcy, an individual must qualify for the program. Once it has been determined that bankruptcy is the route to take, an individual can choose to go through Chapter 7 or Chapter 13 bankruptcy protection.
Chapter 7 bankruptcy is the most common type of bankruptcy filed by individuals. With Chapter 7 bankruptcy, any nonexempt assets that an individual possesses may be liquidated and sold by a court-appointed trustee to pay back creditors. Chapter 7 does not include a plan for repayment. Once the Chapter 7 bankruptcy paperwork has been finalized in court, the debt is wiped clean, giving the individual a fresh start in life.
Chapter 13 bankruptcy allows an individual time to reorganize and come up with a plan to pay back part or all of their debt. The payments are spread out over a 3 – 5 year period and are supervised by a court trustee until the debt has been paid in full. Chapter 13 bankruptcy keeps creditors at bay while payments are being made.
When an individual files for bankruptcy, there are long term consequences that should be considered before going through the process. A bankruptcy filing will remain on one’s credit record for 10 years. It may also make it difficult to obtain credit cards, loans, and housing options in the future. However, a debt-free fresh start may far outweigh any negatives associated with bankruptcy.
If a debt has become impossible to pay back, it may be time to seek legal help. Please visit http://tulsabankruptcylawyers.net/ to see what options are available.