Besides the obvious of eliminating all qualifying debt, there are certain advantages to different types of personal bankruptcy. The two chapters of the bankruptcy code that benefit consumers are Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 bankruptcy is sometimes referred to as liquidation bankruptcy. It is easier and faster than a Chapter 13 bankruptcy. From the time you file the paperwork, a Chapter 7 bankruptcy is usually completed within six months.
Under this type of bankruptcy, you must give up any nonexempt property to be sold and distributed to your creditors. Rarely will you actually lose any of your assets due to the exemption laws. If you want to turn in your secured assets and stop all payments on it, you will have that option. Chapter 7 completely eliminates your unsecured debt, such as credit cards, medical bills, and payday loans.
Chapter 13 bankruptcy allows you to keep all of your assets and make a court-approved repayment plan to satisfy your creditors. This type of bankruptcy is useful if you are facing foreclosure on your house, and you wish to keep your home. After the predetermined length of time for making your payments, all of your qualifying debt will be eliminated. You must continue to make payments on your home or car if you wish to keep them.
Filing bankruptcy stops the creditor calls and letters. The automatic stay goes into effect as soon as you file your papers with the court. The advantage of the automatic stay is that it gives you relief from the constant phone calls and stops any legal action against you regarding your debt.
An advantage of eliminating your unsecured debt such as credit cards, loans, and medical bills, is that it frees up more money for education, retirement and better financial planning.
If you would like to know more about how bankruptcy can benefit you and your family, contact a Plano bankruptcy attorney.