Chapter 7 is the Most Common Type of Bankruptcy Filing
When there is no possible way for consumers or businesses to practice financial responsibility, then knowing the different options available will help in choosing the right course to take. The most common types of bankruptcy that individuals and families use our Chapter 7 and 13. A Chapter 7 filing is mostly used when individuals don’t have a lot of assets to liquidate to pay back the debt. Bankruptcy laws vary from state to state, but most states have Chapter 7 exemptions that allow many of the assets to be protected. Many states have large exemptions for home equity, automobiles and household goods. If you want to keep your house you will need to pay for it though. When filing bankruptcy the court will want to make sure that you are current on your house payment if you’re planning on keeping it. A car is another item that is generally secured by the loan and if you want to keep it you need to continue paying the payments on time or the creditor will repossess it. Individuals that file Chapter 7 bankruptcy will enjoy being debt free except for this secured property that they decide to keep. If you file a Chapter 7 bankruptcy you will not be able to file again for eight years, so you must make sure that you include all your debts that you want to wipe out. The majority of bankruptcies filed our Chapter 7.
With Chapter 13 bankruptcy, people have the option of paying back their creditors. A Chapter 13 filing will stop collections and forclosures temporarily, giving the bankruptcy filer time to come up with a plan to pay off the debt over 3 to 5 year time frame. This will give you power to possibly restructure your home loan or car loan and lower your interest rates and payments if it is agreed upon with the creditors. All negotiations in this type of bankruptcy filing have to be approved by the trustee and the court.
