Bankruptcy is defined as a “legal proceeding in which an individual who cannot pay his or her bills can get a fresh financial start.” All bankruptcy cases are handled in federal court and filing for bankruptcy immediately halts those seeking to collect debts from you until your debts are sorted out.
Filing for bankruptcy is not for everyone so it is important to consult an attorney if you think it might be your best option. Also keep in mind there is more than one type of bankruptcy available. In fact, there are five different chapters debtors can file under, three of which are for individuals:
- Chapter 7 – known as “straight” bankruptcy or “liquidation.” The idea is to wipe out debts in exchange for giving up your property that is not considered exempt. Those properties will be sold with the money going to creditors. Since Chapter 7 does not eliminate the right of mortgage holders or car loan creditors to take your property if your behind on payments, this might not be a good option for some.
- Chapter 11 – known as “reorganization,” Chapter 11 bankruptcy is used by businesses and a handful of debtors with very large debts. A debtor proposes a plan of reorganization to keep its business alive and pay creditors over time. Individuals can also file under Chapter 11.
- Chapter 13 – also known as “reorganization”, Chapter 13 lets individuals keep property while filing a plan to show how you will pay off your past and current debt over 3 to 5 years. Those with regular income tend to be better off filing under Chapter 13.
As mentioned earlier, if you are thinking about filing for bankruptcy it is essential that you seek out the assistance of an experienced bankruptcy attorney. The Law Offices of Silverman & Roedel, LLC have knowledgeable bankruptcy attorneys prepared to explain and help you get the fresh financial start you need. Contact their office at 973-772-6411 to set up a free consultation today.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney/client relationship. If you are seeking legal advice, please contact our law firm directly.