When people get in over their head with debt, the laws of the United States have provided legal options to help. Bankruptcy is a legal way for people to be released from liability for their debts. The bankruptcy process occurs in a court with a judge and a court trustee who will examine the ability of the person to pay their debts and decide whether or not their debts should be discharged. There are two different types of bankruptcy that the majority of bankruptcy cases are filed as: Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
The majority of bankruptcy cases in the United States are filed as Chapter 7 bankruptcies; these accounted for 63 percent of cases in 2015. A Chapter 7 bankruptcy is what you usually think of when you think of bankruptcy--all of your debts are discharged if you are granted a bankruptcy under this chapter.
In a Chapter 7 bankruptcy, you are able to keep exempt property, which can include:
- Your home;
- Your car;
- Health or disability benefits;
- Life insurance;
- Child support;
- Unemployment compensation;
- Workers’ compensation; and
- Veteran’s benefits.
Any other property can be sold to help pay back creditors and reduce your debt as much as possible.
Chapter 13 Bankruptcy
Unlike a Chapter 7 bankruptcy, if you are granted a Chapter 13 bankruptcy, you agree to repay some of your debts and have the rest discharged. This type of bankruptcy requires you to complete a three-to-five year repayment plan, and upon successful completion, the remaining debts are discharged. Usually, the people who apply for Chapter 13 bankruptcy are those who have regular income and do not qualify for Chapter 7 bankruptcy.
Consequences of Bankruptcy
Though bankruptcy is often a person’s only choice, it has consequences. When you file for bankruptcy, it appears on your credit report, with the length of time depending on the specific type of bankruptcy you filed for. A Chapter 7 bankruptcy appears on your credit report for 10 years, and a Chapter 13 bankruptcy appears on your credit report for seven years. This can often lead to difficulty obtaining new lines of credit, such as a loan to buy a car or house.
Contact an Orland Park Bankruptcy Attorney
If you have amassed debts that you cannot pay back, filing for bankruptcy may be your best option to help you get a fresh start and ensure your ongoing financial security. You need the guidance and the expertise of a Tinley Park bankruptcy lawyer. Contact Anderson and Associates, P.C. to discuss your options and learn which type of bankruptcy is right for your situation. To schedule a free consultation, call our office at 708-226-9904.