Bankruptcy is a legal process of declaring that you are no longer able to pay the debtors that you owe, and gain a fresh financial start. Even though there are actually 5 types of bankruptcy, most consumers are only able to take advantage of 2 options; Chapter 7 and Chapter 13 bankruptcy. If you aren’t sure which one would be the best one for you to file, it might be best to consult a legal advisor.
Chapter 7 bankruptcy is known as a liquidation type of bankruptcy. It is meant for debtors that are having problems with their finances, usually an inability to repay the debts they have already taken out. In order to be eligible for Chapter 7 bankruptcy, you have to pass what’s known as a Means Test. It will determine if you qualify for this type of debt relief, or if you will have to file for Chapter 13 bankruptcy instead. The ultimate goal of Chapter 7 is to be discharged from your debts. But not all debts can be gotten rid of. If you still have criminal fines, alimony, child support, student loans, or taxes that you owe, a chapter 7 bankruptcy will not remove those items from your debt. It is intended to take care of things like credit cards, personal loans, and medical bills. You will usually be required to surrender any property that you cannot make the payments on. Learn more by visiting a fort worth bankruptcy attorney.
With Chapter 13 bankruptcy, you are more likely to be able to keep your property. Say you fell behind on your car or house payments, and it has been quite a few months since you were able to make payments. Most of the time, the car finance or mortgage company will stop accepting payments from you after about 3 months. That means even if you are able to continue paying off your loan, they would refuse your payments. Finance companies will accelerate your loan making the full balance due. When you file a chapter 13 bankruptcy, you are stating that you can pay off your debts, but that you need a more organized way to pay everything off. You will have to prove that you can indeed afford to pay off your bills, but if you can do that, you may be able to save your car or your home. You must show that you have a steady income, and a plan to pay off the accumulated debts.