Bankruptcy. It is the “B” word no one likes to hear. The decision to file bankruptcy shouldn’t be taken lightly. It’s a challenging process and should be discussed with an experienced attorney to explain your options and help determine if filing bankruptcy is right for you. Here are some terms and definitions you should be familiar with when considering bankruptcy:
DEFINING BANKRUPTCY: Bankruptcy is a court process designed to help eliminate debt from individuals and business that can’t pay their bills. No matter the reason for the debt, bankruptcy laws were created to give people and businesses a second chance.
TYPES OF BANKRUPTCY: While there are several types of bankruptcy, the most common are Chapter 7 and Chapter 13.
CHAPTER 7 BANKRUPTCY: Chapter 7 is the most common form of bankruptcy making up over half of individual bankruptcy cases. It is a chance to have the court release you from the responsibility for repaying debts. You are allowed to keep key assets considered “exempt” property, but “non-exempt property” will be sold to help repay part of your debt.
EXEMPT PROPERTY: Considered your key assets and not sold to repay debt include: your home, the vehicle used for work and equipment used at work, Social Security checks, pensions, veterans benefits, welfare and retirement savings.
NON-EXEMPT PROPERTY: A court-appointed bankruptcy trustee will be enlisted to sell your non-exempt property to include cash, bank accounts, stock investments, coin or stamp collections, second cars or second homes, etc. These items will be liquidated and used to repay lenders.
CHAPTER 13 BANKRUPTCY: Chapter 13 allows you to pay your debts over an extended period of time. The court will determine an approved, supervised, and enforced payment plan to help you repay some of your debt to have the rest forgiven if you complete the plan. Chapter 13 filers usually do not qualify for Chapter 7 because their income is too high. If you don’t successfully finish the payment plan, debtors sometimes pursue a Chapter 7 bankruptcy.
Stay tuned for part 2 of Bankruptcy 101. For more information regarding legal issues and your specific situation, contact Gerstenberger Law at (770) 920-7722.
Sources:
www.legalzoom.com
The information found on the Gerstenberger Law site is for educational purposes only. Your situation and the situation of others are unique and more complex. This is neither legal advice nor to be considered legal advice. Contact us for advice about your specific situation.
