Whenever you need to file for bankruptcy, it can be a terrifying experience for you. Not only do you need to go through the stress and frustration of the ordeal, but you also need to do it right. There are several different types of bankruptcy, and two of the major types are Chapter 7 and Chapter 13.
These legal options for your bankruptcy are both able to take on your debt, but both of them have consequences for you. It’s important to understand them before you take steps into filing for bankruptcy. Each one has it’s benefits and drawbacks, as well as long term effects on your life. Make sure to keep all of that in mind as you examine the options.
What Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is called liquidation. It helps you by having you surrender some property or assets that can be turned into money. If you have no disposable income on hand to handle this massive debt, then you can file chapter 7. If your debt is discharged by chapter 7 bankruptcy, then you don’t have to pay that debt back. The money can then go somewhere else, and most debts can be discharged with few exceptions.
Filling can also increase the speed at which you overcome your debts, and can also stop debt collectors from taking action against you. That is very appreciated for people who are debt ridden, and it only takes around 100 days to finish. Your assets and credit will take a hit, but you will be debt free.
What Is Chapter 13 Bankruptcy?
If you want to file your debt but wish to keep your property, then you can file for chapter 13. If you have disposable income on hand, then this is right for you. It will stop any foreclosure processes on your home, and will allow you to get a handle on your mortgage payments. It also stops your debts from being collected if they are discharged under chapter 13.
Chapter 13 also allows you to make consolidated monthly payments with a solid 3 to 5 year plan. You will know exactly what to pay, and when you need to pay it. It is not as fast as chapter 7 bankruptcy, and can strain your budget. However, if you can keep up with the plan, you will be able to keep your property throughout the process.
Picking The Right One
If you are still undecided about which one is the best for you, then you should try to talk to a lawyer and see if they can help you make your choice. They will have your best interests at heart and will be able to answer any questions that you have. Filing for bankruptcy is something that is tough for every single small business owner, but you need to make sure that you are completing the process. By examining your situation before you start the filling process, then you can make the best decision.