The most popular types of bankruptcies are Chapter 7 and Chapter 13. Chapter 7 compels qualified individuals to sell their assets to pay off their creditors, whereas Chapter 13 compels qualified individuals to reorganize their debts to pay their creditors in fixed monthly installments.
When certain individuals are unable to pay their debts, they tend not to pay them, which impacts their credit score. When debts surpass incomes, Individuals can legally have their debts reduced and ultimately, eliminated.
This series discusses bankruptcy. Most importantly, it explains the two main types of bankruptcies and how both of them can help individuals regain financial freedom. Without further ado, let’s dive right into it.
The thought that people file for bankruptcy because they have bad credit or because they do not have fiscal discipline is false. The other falsehood is that people who file for bankruptcy cannot apply for new credits and lose their assets. The main reason people file for bankruptcy is to eliminate their debts.
Bankruptcy is a way to either erase your debts or make a plan for you to pay them back. Bankruptcy erase some debts not all especially child support, alimony, student loans, to name just a few. However, it does erase unsecured debts such as personal belongings, credit cards, inexpensive cars, payday loans, mortgages, tax debts, and certain types of student loans. The government may guarantee student loans for individuals who have remained unemployed for over seven years after they have been out of school.
The most popular types of bankruptcies are Chapter 7 and Chapter 13. Chapter 7 compels qualified individuals to sell their assets to pay off their creditors, whereas Chapter 13 compels qualified individuals to reorganize their debts to pay their creditors in fixed monthly installments.
The goal of Chapter 7 is for qualified individuals to become debt-free in less than nine months while that of Chapter 13 is for qualified individuals to become debt-free between three to five years. Therefore, In layman’s terms, Chapter 7 is asset liquidation bankruptcy while Chapter 13 is a repayment plan bankruptcy, and neither one of them relieves individuals from their financial responsibility toward their creditors.
Bankruptcy cases stay on individuals’ credit reports for up to seven years. Even so, within these seven years, individuals can still apply and qualify for secured and unsecured loans.
I advise anyone contemplating the bankruptcy route to conduct ample research before filing. There are alternate methods to pay off debts without losing assets. Filing a consumer proposal may prevent individuals from selling their assets. A consumer proposal is a deal allowing qualified individuals to make reasonable monthly payments to their creditors until the debt is paid off.
In summary, bankruptcy is a legal process that allows people to have some of their debts erased or individuals to be debt free and, depending on the type of bankruptcy, keep their assets. People with good credit can still file for bankruptcy and preserve their assets. Chapter 7, which involves selling assets to pay off the debt in as little as nine months and Chapter 13, which involves reorganizing the debts and paying them off over 3-5 years are the main types of bankruptcies.
This series discusses bankruptcy. Most importantly, it explains the two main types of bankruptcies and how both of them can help individuals regain financial freedom. Without further ado, let’s dive right into it.
The thought that people file for bankruptcy because they have bad credit or because they do not have fiscal discipline is false. The other falsehood is that people who file for bankruptcy cannot apply for new credits and lose their assets. The main reason people file for bankruptcy is to eliminate their debts.
Bankruptcy is a way to either erase your debts or make a plan for you to pay them back. Bankruptcy erase some debts not all especially child support, alimony, student loans, to name just a few. However, it does erase unsecured debts such as personal belongings, credit cards, inexpensive cars, payday loans, mortgages, tax debts, and certain types of student loans. The government may guarantee student loans for individuals who have remained unemployed for over seven years after they have been out of school.
The most popular types of bankruptcies are Chapter 7 and Chapter 13. Chapter 7 compels qualified individuals to sell their assets to pay off their creditors, whereas Chapter 13 compels qualified individuals to reorganize their debts to pay their creditors in fixed monthly installments.
The goal of Chapter 7 is for qualified individuals to become debt-free in less than nine months while that of Chapter 13 is for qualified individuals to become debt-free between three to five years. Therefore, In layman’s terms, Chapter 7 is asset liquidation bankruptcy while Chapter 13 is a repayment plan bankruptcy, and neither one of them relieves individuals from their financial responsibility toward their creditors.
Bankruptcy cases stay on individuals’ credit reports for up to seven years. Even so, within these seven years, individuals can still apply and qualify for secured and unsecured loans.
I advise anyone contemplating the bankruptcy route to conduct ample research before filing. There are alternate methods to pay off debts without losing assets. Filing a consumer proposal may prevent individuals from selling their assets. A consumer proposal is a deal allowing qualified individuals to make reasonable monthly payments to their creditors until the debt is paid off.
In summary, bankruptcy is a legal process that allows people to have some of their debts erased or individuals to be debt free and, depending on the type of bankruptcy, keep their assets. People with good credit can still file for bankruptcy and preserve their assets. Chapter 7, which involves selling assets to pay off the debt in as little as nine months and Chapter 13, which involves reorganizing the debts and paying them off over 3-5 years are the main types of bankruptcies.