According to the U.S. Constitution, people can relieve their debts in whole or in part if they do not meet its obligations to their creditors. There are two main types of personal bankruptcy that can be applied to consumers. These are Chapter 7 bankruptcy and Chapter 13 bankruptcy.
What is Chapter 7 bankruptcy?
All or part of their debts are discharged in Chapter 7 bankruptcy, using the liquid assets to pay part of their debts.
What is the liquid element?
You can make your liquid assets of your possessions. Your checking and savings accounts can be quickly converted into cash. Courts distribute the liquid assets among the creditors as partial payment. These are the types of assets that can not be used to pay your creditors. Such assets are called non-exempt assets. Its been recognised that liquid assets were exempted and are included non-exempt. After that you will not be liable for any discharge from debt nor your creditors are entitled to collect debts from you.
How do you qualify?
You must pass a means test which will demonstrate that their income is below the income needed for family size in your state. If you pass, you are entitled, but if not, then you can not file for Chapter 7. So you can file Chapter 13. You should get credit counselling of any approved credit counselling agency.
What is Chapter 13 bankruptcy?
According to the Chapter 13 plan, you have to pay all or part of its debt through a 3 to 5 year plan. In making the declaration of bankruptcy, it is also required to submit a payment plan with the court. When submitting the plan, you need to start making payments to the court, then the court will pay the amount to your creditors. After a few weeks, there will be a court hearing to approve payment plans. Once your plan is approved, you can begin to make payments to the court. Once you complete your repayment plan in Chapter 13, you will not be responsible for any debts discharged more.
Why file personal bankruptcy?
Personal bankruptcy laws are very complex. So it is better to have advice from a bankruptcy lawyer before filing bankruptcy. And this is the best way, as it would settle its working document accurate and complete.