In the event that you cannot pay off your debt and you find that the situation is beyond you, your only alternative is to file for bankruptcy Many people seek bankruptcy because they are unemployed, have large medical expenses, have marital problems, or have another unexpected expense. Going through bankruptcy is a very unfortunate and stressful situation for people, and for most of us we will have lots of concerns over what we should be doing and what we should not be doing.
Your most wise step in the beginning of such an ordeal is to procur the services of specialized lawyers who deal with bankruptcy and get their advice on developing a strategy. In most cases an attorney will be happy to consult with you free of charge intially in order that you can assess if his advice is sound . If it is,then your attorney will prepare your petition which you will sign and he shall file it on your behalf. Thereafter within about a month you will be expected to attend a formal meeting, usually referred to as a 341 meeting. There is nothing to be concerned with as this meeting is a fact finding meeting to determine that everything in your petition is true and correct. Approximately 2 months after this meeting you should be released from your debts with a letter of discharge.
In many cases there are two types of personal bankruptcy procedures that can be followed. Chapter 7 bankruptcy is sometimes referred to as a straight bankruptcy because it is a liquidation proceeding. In Chapter 7 you will have to off set your debts with your assets in hand at the time of filing your petition. The trustee will sell off this property and distribute the cash to the creditors. In return, the debtor is discharged from all debts within a few months. In most cases of Chapter 7 Bankruptcy, the debtor has no assets to loose, so it provides the debtor with a quick fresh start.
Another type of bankruptcy is a reorganization of debt called a Chapter 13 Bankruptcy. This type of bankruptcy allows debtors to pay off their debts over a span of three to five years. Chapter 13 is set up for those people who would prefer to retain their assets and not forfeit them, or in the case that the debtor may have an income that they can afford to make repayments.
In order to decide which way to move forward with either Chapter 7 or Chapter 13 bankruptcy is to evaluate the non exempt assets of the debtor. In a bankruptcy, the trustee will liquidate any assets that are not exempt. There are more than a few specific exemptions that you can apply for when filing for bankruptcy, or you may choose to use the Federal exemptions in your petition. The state exemptions include the following: homestead, personal property, insurance or government benefits, property of a business partnership, tools of trade, and wages or commissions. Consult a Bankruptcy Attorney in your area for specific information on exemptions.
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