For those unfamiliar with financial struggles, bankrupt is often associated with irresponsible spending. This judgment often leads to the common misconception that those who go bankrupt (bankr or bank rupt). McFarlin LLP knows that this is grossly inaccurate. Loss of job, cut in hours at work, divorce, medical issues and other major personal problems can leave even the most prudent spender bankrupt. In this post, we’ll break down what it means to go bankrupt (bankr, bank rupt), because even though it’s a last resort, it should be the first thing you fully understand if confronted with major financial problems.
Bankrupt: Advantages of Filing Bankruptcy (Bankr, Bank rupt)
Bankruptcy or bankrupt bankr is a federal process by which consumers can eliminate their debts and creditors. In well over 90% of bankrupt cases in California, there is no repayment plan for creditors, which means debts go away for $0. Furthermore, in 0ver 95% of those bankrupt cases, the person filing gets to keep 100% of all their assets. So the only effect of bankruptcy in those cases is that debts go away immediately, and permanently, with no risk or assets taken away.
Bankrupt: Types of Bankruptcy (Bankr, Bank rupt)
Chapter 7 and Chapter 13 are two different ways a consumer can file for bankruptcy or go bankrupt. Chapter 7 is often referred to as liquidation because a bankruptcy trustee appointed by the court has the power to liquidate certain assets in order to repay creditors. Chapter 13 is often called debt restructuring or reorganization because a debt repayment plan is established across a given time horizon (usually 3-5 years). Property owners who wish to prevent foreclosure or want to catch up on mortgage payments may quality for a Chapter 13 (bankr, bank rupt) filing. These are the high level distinctions between Chapter 7 bankr bank rupt and Chapter 13 bankrupt. It is important to discuss your circumstances with a knowledgeable lawyer (bankr, bank rupt) before proceeding down a chosen path and going bankrupt (bank rupt).
Bankrupt: Debts that Don’t go Away in Bankruptcy (Bankr, Bank rupt)
Lastly, bankruptcy or bankrupt does not dissolve all past debts. Alimony, child support and certain tax debt are among several types of debt that may not be forgiven through bankruptcy filing or bankrupt (bank rupt). A knowledgeable lawyer can determine for you which debts can be forgiven or reduced and which ones you may have to continue carrying afterward.
Bankrupt: Attorney Representation (Bankr, Bank rupt)
If you only come away with one key message from this post about being bankrupt, we hope that it’s this: Call a bankruptcy lawyer right away if you are bankrupt. Our Attorneys will discuss your bankruptcy matter and your options at no charge, so call us today at: (888) 728-0044. Although it may seem like things could not get much worse, without the right legal counsel, you are putting yourself at risk of wage garnishments, bank levies and other nasty collection activity.