Understand Chapter 7 and 13 Bankruptcy
The key concept to understand is that bankruptcy is a process. Let’s dive a little deeper, shall we?
Different types of Bankruptcy
The term bankruptcy is more of an umbrella term that essentially means an individual or business has more debt than they can repay and in turn immediate action is being taken. There are two basic types of bankruptcy:
Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.
What is Chapter 7 Bankruptcy?
Chapter 7 Bankruptcy involves a term called liquidation. Liquidation is the process of selling one’s assets for money. Chapter 7 bankruptcy may involve the bank selling off your assets in order to get the money you owe. If you know how the system works (our speciality), you may be able to hold certain properties exempt from liquidation like a house or car. Chapter 7 usually ends the debt process meaning, once chapter 7 has been filed and the property has been liquidated to a satisfactory degree, the debt is repaid and you no longer owe money.
What is Chapter 13 Bankruptcy?
If you have a steady reliable source of income, you may not qualify for Chapter 7 bankruptcy and must instead file for Chapter 13. Chapter 13, unlike Chapter 7, does not involve liquidating your assets. Instead, Chapter 13 is a process that involves setting up a payment plan for repaying that debt. Repayments can be based on what type of debt you have. Secured debt, for example, is many times in the form of a home mortgage. If you are unable to pay your mortgage, the bank may have the ability to seize your home and sell it to recoup the lost payments. Unsecured debt is different from secured in that the loan is given without collateral. If unsecured debt is acquired, the lender may take legal action to obtain the missed payments.
Filing for bankruptcy can seem scary and honestly, it is if you don’t have someone fighting on your side. However, with an attorney like Brent Welke on your side, bankruptcy doesn’t have to be a scary process and can actually relieve a lot of stress by the time it’s over. You need someone on your side that knows the system, someone like Brent Welke.
Let us help you get a fresh start! PH: 317-748-7772
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