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Bankruptcy: A brief synopsis
Bankruptcy law is governed by federal law. It contains the provisions that make up current bankruptcy law. Individual states may not regulate bankruptcy. Bankruptcy proceedings are handled in the United States Bankruptcy Courts.There are two basic types of bankruptcy: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy (11, 12, & 13 are similar but are specific to businesses, farms and individual or families). Chapter 7 Bankruptcy is usually referred to as liquidation. A trustee is appointed who liquidates the debtor's assets and distributes the proceeds to creditors. Chapters 13 Bankruptcy is aimed at rehabilitating the debtor to allow him to use future earnings to pay creditors with the protection of the government.Bankruptcy Law
Most people find that Bankruptcy is confusing. What kind of chapter should you be declaring? Do they make a difference? It turns out that the chapter you declare does make a difference, and you should talk in detail with your bankruptcy lawyer to see which chapter is right for you. Most likely, he or she will tell you either chapter 7 or chapter 13.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is also called a straight bankruptcy or a liquidation. Roughly 70% of all Bankruptcy filings are Chapter 7 Bankruptcy. Filing bankruptcy chapter 7 is also the simplest way to a financial fresh start.
Technically, if you file chapter 7 bankruptcy, it means your assets will be taken and sold, so the proceeds can go to your creditors. That sounds scary, but in practice, almost no one actually loses their property. There are fabulous things called exemptions which stop that from happening.
What is Chapter 7 bankruptcy and how do I know if it's right for me?
The main goal under any filing in bankruptcy is to give one who is burdened with debt a Fresh Start. A Chapter 7 Bankruptcy is the most common form of bankruptcy filing, accounting for over 65% of all Consumer Bankruptcy filings. A filing under Chapter 7 bankruptcy is often called liquidation or a straight bankruptcy. Liquidation converts one's assets to money. This process involves the appointment of a trustee. A trustee collects all non-exempt property, sells the assets and then distributes the proceeds from the sale to the appropriate creditors. However, unlike other bankruptcy filings, a debtor does not make payments to the trustee. Does this mean that you will lose your assets? The answer depends on your particular situationYbut in most bankruptcy cases you will not lose any of your belongings. If you feel that you may lose some of your possessions, you can discuss with Mr. Sturniolo.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is also called a repayment plan. This is usually used for wage earners whose property wouldn't fall into Chapter 7's exemptions, or for people who are behind on mortgage or car payments. In this type of bankruptcy, you make payments to a Trustee, who distributes your money to your creditors according to a Chapter 13 plan. If you keep up with the plan, you're allowed to keep your property.
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