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Personal Bankruptcy

Bankruptcy can be a second chance. Start over with a clean slate.

Personal bankruptcy is often utilized when a person finds themselves in a large amount of debt, with no workable repayment ability. Often the need for personal bankruptcy arises from tough life situations like a job loss, acquisition of massive medical debt, an oppressive amount of consumer debt or divorce and/or custodial issues. The US Constitution provides citizens a way to discharge their debt, either in full or in part to remedy the situation of them being unable to repay the debt they owe. There are two main types of personal bankruptcy applicable for consumers or individuals, Chapter 7 and Chapter 13 Bankruptcy.

For a free bankruptcy review, call (619) 304-9190 or complete the form below.

Chapter 7 Bankruptcy

This type of bankruptcy allows individuals to discharge part or all of their debts after liquidating nonexempt assets. Liquidation is the act of turning possessions into cash. Applicable assets can encompass a wide variety of possessions, including checking or savings accounts. Some assets must be applied towards creditor debt, while others are considered exempt, meaning they do not have to be used to repay debt. After all non-exempt assets are liquidated and the subsequent resources are used to pay debtors, any debt that remains is discharged. This means the individual is not liable to repay any remaining debt and can keep their exempt assets. Creditors and/or third-party collectors are no longer able to collect applicable debts from someone who has gone through Chapter 7 Bankruptcy.

How Does Someone Qualify For Chapter 7 Bankruptcy?

To qualify for Chapter 7, an individual must be able to prove their income is less than that of the median income level for their area. They must also pass a means test and get credit counseling from an approved agency. The means test determines if an individual has enough disposable income to repay their debts and takes into account factors like a person’s family size, current income and expenses.

Chapter 13 Bankruptcy

The other option for individuals is filing Chapter 13 Bankruptcy. With this type of bankruptcy, individuals agree to repay all or part of their current debt over a three-to-five-year plan. The repayment plan is first sent to the court and approved. Once approved, the debtor makes payments through the court system, who then ensures the creditors are paid. During the process of approving the payment plan, creditors can voice their disagreement with the proposed plan. However, the judge will have the final say as to whether or not a plan will be approved. After an individual goes through the process of making their payments and the plan comes to an end, any remaining debt is discharged and the persona is no longer liable for those debts.

Why Would Someone Choose Chapter 13 Bankruptcy?

Some people prefer Chapter 13 because it does not require the liquidation of all assets. For example, a person might choose this option if they have a car they want to keep. Chapter 7, by comparison, means an individual has to liquidate virtually all their assets. The U.S. Bankruptcy Code states that a person cannot have more than $307,675 in unsecured debt and no more than $922,975 in secured debt in order to file Chapter 13 Bankruptcy. Credit counseling is also required when filing this type of bankruptcy as well.

What Now?

If you feel yourself sinking deeper and deeper into debt with no source of rescue in sight, filing bankruptcy might be the best way to get a fresh start and stop the creditor harassment. Contact us today at (619) 304-9190 for a consultation. We are happy to help you determine if you are a good candidate for either Chapter 7 or Chapter 13 Bankruptcy.

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