Two chapters of the bankruptcy code for personal bankruptcy are Chapter 7 “liquidation” and Chapter 13 “reorganization” bankruptcy. Before considering bankruptcy, you should consult with a bankruptcy attorney to find out which code will suit your personal situation best.
Often called straight, regular, or liquidation bankruptcy, Chapter 7 is bankruptcies purest form. In as little as three to six months, Chapter 7 eliminates all of your unsecured debt. You will not have a repayment plan with this type of bankruptcy. If you have any non-exempt property, the trustee assigned to your case can seize this property and sell it divide the proceeds to your creditors to satisfy the debt to some extent.
Your secured debt, such as your home and your vehicles will not be discharged. You must continue to pay these bills if you wish to continue to use the collateral. If you choose, you can forfeit these assets to discharge the debt. Most of the time, people do not lose any assets when they file Chapter 7 bankruptcy.
Chapter 13 bankruptcy is usually referred to as a reorganization bankruptcy. This type of bankruptcy is for those that have fallen behind in their secured debt and would like the time to catch up on the payments without losing their assets. You and your attorney will submit a plan to the court as to how you intend to pay your arrears. When the court approves your plan, you will have three to five years to catch up. Again, you must continue to make the payment to your home or your vehicle if you wish to keep those assets. At the end of your repayment period, any unsecured debt remaining will be discharged, and you will no longer be responsible for that debt.
If you would like to know more about how bankruptcy can help you contact a Plano bankruptcy attorney today.