If you are in serious financial ruin, declaring bankruptcy may be your only option. If this is the case, it’s important to know what you can lose as a result of this declaration.
Here’s what you need to know about the two most common bankruptcies:
Chapter 7 Bankruptcy
Chapter 7 is the most common bankruptcy that people declare, which is why it is also referred to as “straight bankruptcy” or “traditional bankruptcy.” This type of bankruptcy requires that you permit a federal court trustee to oversee the sale of any assets that are not exempt, such as cars, work-related tools, and basic household furnishings. The money collected from the sale will be paid to your creditors. The amount you still owe after the bankruptcy will be forgiven.
Declaring Chapter 7 bankruptcy will likely result in the loss of your property and other assets. In addition, the negative bankruptcy information will stay on your credit report for 10 years past the filing date.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy will allow you to retain your property as long as you partially or fully repay your debt. A three- to five-year repayment plan will be negotiated by your attorney and the bankruptcy court.
Since you can repay some or all of your debt under Chapter 13 bankruptcy, you may be able to keep some of your assets as well as your property. Also, this type of bankruptcy will be removed from your credit report after seven years.
We Can Help
If you’re fearful for your financial future, it may be time to file for bankruptcy. It is a big decision to make, and not one you should take lightly. Our experienced bankruptcy attorneys are highly skilled in this area of the law and can help you sort it all out. We have helped many other people just like you—let us see if we can help you, too.