Because of worsening economic conditions, personal bankruptcy is on the rise across America. Many who are struggling with debt may consider bankruptcy as an opportunity to hit the restart button, to get a fresh financial start.
Types of Personal Bankruptcy
Individuals have two bankruptcy options to choose from depending on their situation including Chapter 7 and 13. The vast majority filers choose chapter 7 bankruptcy to erase unsecured debt such as credit cards and medical bills that have gotten out of hand. Chapter 7 is a good choice for individuals with fewer assets and modest incomes, who do not have nonexempt property they wish to keep.
Generally speaking, under a Chapter 7 bankruptcy, nonexempt property is sold and the proceeds are used to pay off creditors – any remaining debt is discharged. An individual or married couple filing jointly may keep a limited amount of property such as a defined amount of equity in their home, a car not to exceed the allowance, and wildcard exemptions. It is important to work with an experienced bankruptcy attorney to maximize your exemptions while discharging your debt.
Chapter 13 differs from a chapter 7 as it is a repayment plan which allows a filer to repay lenders while holding onto their home or other belongings. The repayment period lasts anywhere from 2 to 5 years. At the conclusion of the repayment plan, unsecured debt may be discharged.
Contact Peoria bankruptcy attorney Charles E. Covey with any questions you have about Chapter 7 or 13 bankruptcy so that you can decide if bankruptcy is a good strategy to get a fresh start for your financial future at 309-674-8125.
