Bankruptcy Law Basics
Learning the bankruptcy law basics will help you to learn more about what you can expect during the bankruptcy process.
Kinds of Bankruptcies
In most cases, there are two main types of bankruptcies which you might encounter in your life – Chapter 7 and Chapter 13. These bankruptcies both have different consequences when they are filed and approved by the bankruptcy courts.
- Chapter 7 – Your creditors settles your debts using the money you have to your name. You are given a clean slate on certain kinds of debts.
- Chapter 13 – A business sets up a repayment plan for their debts based on their estimated future earnings.
However, not all of your debts will magically disappear, as some people think. Since a bankruptcy can stay on your credit report for up to ten years, you will have to continue to have good credit in order to be able to apply for credit after a bankruptcy.
Where Your Debts Go
Your debts will be settled in the courts, with your assets being used to pay them off as best you can. Though you might not have a lot of money, what you do have will be put toward the remaining debts that you have. When this is done, then the debt is discharged and you will not have to pay anything more on that last debt balance.
Modern Changes in Bankruptcy Laws
However, some people feel that creating too high of credit card bills doesn’t matter since they will simply file for bankruptcy and then be able to start over. This is not the case anymore. The courts will look over the credit card balances to see what can be paid each month and those debts may still need to be settled in full even if other debts are settled in the bankruptcy.
Having a bankruptcy lawyer with legal bankruptcy software on your side will help you to have an easier time navigating the laws of bankruptcy as they are confusing and they can vary from state to state, situation to situation.