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Consumer Bankruptcy

Bankruptcy Filing

It seems like prices keep going up and wages stay the same. If you can’t make your bill payments, you might be looking for a fresh start and may be surprised to hear that filing for bankruptcy protection might be the right move. A lot of us have a vision of bankruptcy that is out of date and not accurate. Bankruptcy is a system designed to help people who can’t quite get out of that debt.

There are two types of consumer bankruptcy, Chapter 7 and Chapter 13. In Chapter 13, your income is the biggest concern and it is compared with your necessary expenses to determine how much you could spare to pay down your debts and get you current with your obligations over the course of either three (3) or five (5) years. This requires a plan that must be approved by the bankruptcy court. This plan is highly complicated and, if done incorrectly, can result in you paying too much or a plan that won’t be approved.Your only remaining option may be Chapter 7.

To use a Chapter 7 bankruptcy, you must qualify for it. Instead of creating a long-term plan where you pay back debt out of excess income, this form of bankruptcy attempts to pay back debt out of liquidation of assets. The court must approve how much your assets are worth, reduced by liabilities to determine this amount. There are a variety of exemptions and protections for certain assets that can keep you from
losing assets. The majority of Chapter 7 bankruptcies filed are considered “zero-asset cases” in which nothing is liquidated at all. This is where it can be done incorrectly and expose you to losing assets you might be able to retain. You should contact a bankruptcy attorney rather than attempt to do this on your own. Call today for a free consultation.

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