Bankruptcy is a legal process which involves an individual who is unable to pay off his/her outstanding debts. Generally, bankruptcy petitions are filed by the debtors. In this process, all the assets of the debtors are assessed and used to repay a part of the outstanding debts. After the completion of this legal process, the debtors are relieved of all their debt obligations. In other words, this is a process which provides you the debtors the chance to start afresh while it also gives the creditors chance to get back at least a part of their money, depending upon the available assets of the debtors. So bankruptcy provides protection to the debtors and offers fair treatment to the creditors. In a nutshell, bankruptcy can indeed be very helpful to solve a financial crisis.
Bankruptcy filings in the country can be of different types. The Chapter 7 bankruptcy involves liquidation of assets whereas Chapter 13 bankruptcy involves debt repayment with lowered debt covenants or payment plans. The time that bankruptcy process takes depends upon the types of bankruptcy. The Chapter 7 bankruptcy cases generally last for few months whereas Chapter 13 bankruptcy case takes 3 to 5 years to get wrapped.
Chapter 7 bankruptcy case
This begins when a bankruptcy petition is filed with the bankruptcy court. A meeting of the creditors is organized around one month after the filing of the petition. The meet provides the bankruptcy trustee to ask bankruptcy questions to the debtors and it asks for documents from the debtors. A credit counseling class is also offered to you for your personal benefit. Nearly two months after the creditors meet, you are discharged. The bankruptcy court offers you the discharge order, which serves as the document to eliminate debts.
Chapter 13 bankruptcy case
The Chapter 7 completely discharges you from debts where as Chapter 13 offers you the chance to restructure your debts. Like the Chapter 7 bankruptcy case, Chapter 13 bankruptcy case begins with the filing of the petition. This is also followed by the meet of the creditors. In the meet, the bankruptcy trustee offers you some realistic solution to restructure your debts. Here you are required to make monthly payments to the bankruptcy trustee. From 2 to 6 months after creditors meet, the trustee will issue a recommendation as to whether or not your plan should be approved by the court. Once your case is confirmed, the next step is to make monthly payment to the trustee who is entrusted to distribute funds to your creditors. The 3-year or the 5-year duration of the case is decided upon your monthly income.
Whatsoever, bankruptcy offers you the chance to eliminate the burden of debts and it also help the creditors to get back at least part of their money.
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Author’s (Samantha Taylor) bio: Samantha Taylor is an effortless writer on personal finance related topic, with profound knowledge on the mortgage industry. She is a prolific contributor in www.mortgagefit.com. Visit this website and enjoy her write ups.
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After reading this i feel that bankruptcy is the best way to eliminate the burden of debts….