A debt, regardless of its nature, must be paid as it's an obligation of each and every individual, as well as businesses. However in an instance where a person in debt cannot pay off their debts they have accrued, they must have an alternative to restructure their debt to keep afloat.
Fortunately, the US government can provide ease to debtors who are troubled by too much financial debts. The debtors shall be provided a chance to discharge the money they owe without worrying about debt collector persecution or legal action. The bankruptcy laws may save a debtor from losing their properties.
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Declaring bankruptcy, though, is not going to keep an individual from being prosecuted for felony or stop any tax claims. Financial obligations just like student loans and child support also under most circumstances non dis chargeable under bankruptcy.
The most common types of bankruptcy are Chapter 7 and Chapter 13, however there are five bankruptcy types. Below is a list of five different types of bankruptcies:
Chapter 7 Liquidation
This type of bankruptcy is the easiest to understand. Business partners, a married couple, or an individual can file for Chapter 7 proceeding. It involves a Credit Counseling Agency interview. One of the requirements is a court appearance by the person filing. The process normally takes approximately three months to finish. When it's completed, a discharge from unsecured debts shall be given by the court. Then, a trustee shall be assigned in determining which of the properties are exempted from liquidation. All the properties regarded as non-exempt shall be used to repay the debts. Anyone who is released from a Chapter 7 bankruptcy will not be permitted to file another Chapter 7 for within 8 years.
Chapter 9 Municipality bankruptcy
This type of bankruptcy case chiefly deals with municipalities. The bankruptcy code says that a municipality is a "political subdivision or public agency or instrumentality of a State". As it deals with municipalities, it could be a very complex case.
Chapter 11 Reorganization Plan
Business corporations are usually filing for this type of bankruptcy. Normally, a bankruptcy would have a court-appointed trustee, but in the proceeding of Chapter 11, the corporation will organize their own reorganization plans. It will consist of various types of strategies for repayment, including debt consolidation measures that are done in cooperation with creditors.
Chapter 12 Family farmer bankruptcy or family fisherman bankruptcy
This type of bankruptcy proceeding is only for family fishermen and farmers that earn a steady income yearly. The repayment of financial debts will depend on the prospect earnings of the farmers and fishermen, while their properties will not be used to pay for their lenders.
Chapter 13 Wage earner's payment plan
Only individuals who have fixed earnings can file for such type of bankruptcy proceeding, which makes it possible for borrowers to save their assets. The debtor is going to pay the financial debts by allotting a percentage of his/her income to repay the lenders.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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