During tough times like recession or covid, we are facing financial difficulties in our lives. Either you have your own business or working in a firm, every one of us has faced low sales, salary deductions, and the sort. It is becoming challenging to manage our home and family expenses. Your bills are getting piled up despite our heartfelt efforts. One solution to this situation is filing bankruptcy. Bankruptcy is a legal process involving a person or business that is unable to repay its outstanding debts. You can get help by clicking here.
How to be done?
It can be filed by the debtor or by the creditor (in a few cases) in a federal court. It helps the debtor to get free from some or all of their debts. The debtor’s assets are measured and used to repay some portions of the debt.
Types of Bankruptcy
There can be multiple types: chapter 7 for liquidating assets, chapter 11 for individual and company reorganization, and chapter 13 for debt repayment with lower debt covenants.
What can be covered?
Chapter 7 bankruptcy can help eliminate the following types of debts:-
- Credit Card Debt
- Personal Loans
- Medical bills
- Back rents
- Other unsecured liabilities
However, it is desirable to know that few debts can not be eliminated like:-
- Student loans
- Government loans
- Certain Tax debt
- child support obligations
- Alimony payments
- Personal injury debts
Even if certain debts are not exempted, they still help individuals or organizations to a fresh start.
Inclusion of court procedure
The process of filing bankruptcy has to start with getting a legal consultation. Individuals can file bankruptcy on their own but getting a piece of legal advice always helps. After filing all the documents in a federal court, a federal judge will rule
- whether a debtor is eligible to file
- whether the debtor should be discharged of their debts
A Trustee is appointed by the United States Trustee Program of the Department of Justice to represent the debtor’s assets and estate in the proceedings. At the end of court proceedings, the debtor is relieved of the debt obligations. The creditor has no right to ask and collect the debts through any activities like phone calls or letters. It gives protection to the debtor right from the start of filing and through the legal process.
It takes about 4 months for the whole process to complete. It can be overwhelming for you, but you can secure your future finances with the advice of trusted professionals.