Bankruptcy is a legal status that can either exempt a person of the responsibility of paying back their debt, or reduce the debt a great.
In Chapter 7 bankruptcy the debtor does not have to pay back any of his or her creditors. There are certain criteria that must be met before a debtor can apply for this status. A bankruptcy attorney will establish what chapter of bankruptcy his client must file for. He will conduct the median test to see if his client file for chapter 7 or chapter 13 bankruptcy. After this is established, the attorney would start gathering information on all of creditors so that he can put the necessary paperwork together to file for Bankruptcy for his client.
US Bankruptcy in Simple Terms
If you find yourself overwhelmed by debt, you may be considering bankruptcy as a means of debt relief. Bankruptcy can absolve you of all or a portion of your debt but will negatively affect your credit rating. There are several types of bankruptcy. Chapter 7 bankruptcy means all assets are sold to pay off debts, and any unsettled debts are discharged. Chapter 13 is considered a reorganization, which means an agreement between the debtor and creditors is reached and a portion of the debt is paid over a 3 to 5 year term, and the rest is discharged. Your unique situation will determine the best type of bankruptcy to file.Many debtors wonder if they can keep their home or car in the bankruptcy. It is often possible to keep these assets, but extra real estate, cars or recreational vehicles may have to be sold. A bankruptcy attorney can advise you in the best way to proceed with a bankruptcy.