Types of bankruptcy
There are two main types of bankruptcy : chapter 7 and Chapter 13. The names come from the function of the Bankruptcy law that they come from.
Reading: Bankruptcy basics
In a chapter 7 bankruptcy, many of your debts are “ discharged, ” or canceled. This means you nobelium longer owe them. Most of your property is sold to pay off your debts. You are allowed to keep some place. This is called “ nontaxable ” property. To qualify for a chapter 7, you must have very broken income and assets. Learn more about qualifying for bankruptcy.
In a chapter 13 bankruptcy, you agree to a refund plan to try and pay off your debts. You besides get to keep most of your property. To qualify for a chapter 13, you must have adequate income to make payments on your debt. Learn more about qualifying for bankruptcy. A judge will review your refund plan and decide whether to approve it. If the plan is approved, you will make payments to a regent. The regent then pays your creditors. In a chapter 13 bankruptcy, you must pay your creditors in full if you can. If that is not possible, you must pay all of your disposable income for 3-5 years. disposable income is the income left over after paying necessary living expenses. once the refund plan is completed, you will get a discharge of your debts. You must pay certain back taxes and any obligations in child patronize and care in full during the plan. besides, some types of debts will not be discharged. It is important to speak with a lawyer if potential before filing for chapter 13 bankruptcy because creating a repayment plan is a tough thing to do.
Reasons to file for bankruptcy
here are some good things that might happen if you file for bankruptcy :
- In Chapter 7, most debts are discharged ( wiped out ), giving you a fresh starting signal ;
- In Chapter 13, you can save some of your property like a house or car ;
- wage garnishment and harassment by collection agencies; Bankruptcy stopsand harassment by solicitation agencies ;
- Foreclosures and repossessions are stopped and can not move forward unless the court allows ;
- You can keep exempt place ;
- You can stop utility program shut-offs, or restore service after paying a reasonable depository, then pay alone for current service ;
- Employers and public agencies can not retaliate against you for filing bankruptcy ; and
- If your driver ‘s license was suspended for not paying a debt that is dischargeable in bankruptcy, you can get your license reinstated .
Reasons not to file for bankruptcy
here are some reasons bankruptcy might not be a good theme for you :
- Bankruptcy stays on your credit rat for 7 to 10 years ;
- Getting credit may be harder or more expensive ;
- It can cause breed in relationships with some creditors and cosigners ;
- You may have to return property that is not paid for ( chapter 13 can be used to save some extra property ) ;
- You can only get a chapter 7 discharge once in eight years ; and
- You may be able to protect your income and place without filing bankruptcy .
besides, the pursuit types of debt will remain even after a bankruptcy :
- Unpaid child accompaniment payments
- unpaid alimony or alimony payments
- Unpaid fines
- scholar loans ( normally )
- Most amateur express and federal taxes
- criminal damages orders
- fraud, theft or embezzlement Debts due to, larceny or
- Damages to another person caused by drink drive or something done on aim
- Debts from a property colonization in a disassociate
finally, here is a list of things bankruptcy can not do for you :
- mortgage or security in a car Get rid of a security pastime, such as aor security in a car
- eviction, if the eviction court already entered an Stop an, if the eviction motor hotel already entered anEviction Order before the bankruptcy was filed
- Protect cosigners, unless they besides file bankruptcy
- Release you from credit circuit board debts that happened right before the bankruptcy was filed
- dismissal debts that are incurred after the bankruptcy is filed
- acquit debts the court decides you can afford to pay if you have adequate income
- Allow you to keep valuable property, such as a vacation home, an RV or expensive jewelry
Bankruptcy normally won ’ thymine serve if you ’ re collection validation
Filing for bankruptcy will normally not help you if you are collection proof. You are a solicitation proof debtor if all of the postdate are true :
- You have no income, your take-home pay from work is below $ 540 a workweek, or your income is entirely from a protected informant like populace benefits, child patronize or Social Security .
- equity. Equity is the difference between how much is owed on the mortgage and how much the house is worth right now. You do not own a home, or own one with less than $ 15,000 inis the remainder between how much is owed on the mortgage and how a lot the house is deserving right now .
- You do not own a car, or own one with less than $ 2,400 in equity.
- You do not have personal property, including money in bank accounts, worth more than $ 4,000 .
If you are a solicitation proof debtor, you do not need bankruptcy to stop debt collectors from contacting you. You can use our letter from Collection Proof Debtor to ask the debt collectors to stop reach you.
Bankruptcy while married
If you are married, you do n’t have to file a joint bankruptcy with your spouse. You can choose to file for bankruptcy alone. however, you placid have to include your spouse ‘s income on some bankruptcy forms.