How To Declare Bankruptcy in US?

How To Declare Bankruptcy in US?

The process of declaring bankruptcy can be a difficult and stressful one. There are many things to consider before taking this step, such as the type of bankruptcy you will file, how it will affect your credit and finances, and what assets you may lose.

If you have been shopping excessively, using credit cards, taking out payday loans, and car loans, among other things, you could have accumulated a lot of debt. For people who are struggling to pay expensive medical bills and have no income or insurance, this can often lead to falling behind on payments and eventually declaring bankruptcy.

 

Before you can declare bankruptcy, you must first decide which type is right for you. The most common types of bankruptcy are Chapter 7 and Chapter 13.

 

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy, also known as liquidation bankruptcy, is the most common type of bankruptcy filed in the United States. In a Chapter 7 bankruptcy, your non-exempt assets are sold to pay off your creditors. Once your assets are sold and your debts are paid, your bankruptcy case is closed.

 

What is Chapter 13 bankruptcy?

Chapter 13 bankruptcy, also known as reorganization bankruptcy, is another common type of bankruptcy. In a Chapter 13 bankruptcy, you propose a repayment plan to the court that lasts for three to five years. This repayment plan details how you will repay your creditors with your income. Once you have made all of your payments, your bankruptcy case is closed.

 

Bankruptcy chapter 7 vs 13

There are two main types of bankruptcy: Chapter 7 and Chapter 13. Each type of bankruptcy has its own advantages and disadvantages, so it is important to understand the difference between the two before you decide which one is right for you.

Chapter 7 bankruptcy, also known as liquidation bankruptcy, is the most common type of bankruptcy. In Chapter 7 bankruptcy, your non-exempt assets are sold to pay off your creditors. Once your assets are sold and your debts are paid, your bankruptcy case is closed.

Chapter 13 bankruptcy, also known as reorganization bankruptcy, is less common than Chapter 7 bankruptcy. In Chapter 13 bankruptcy, you will propose a repayment plan to the court that lasts for three to five years. This repayment plan details how you will repay your creditors with your income. Once you have made all of your payments, your bankruptcy case is closed.

One of the biggest advantages of Chapter 7 bankruptcy is that it can help you eliminate most, if not all, of your debts. Chapter 7 bankruptcy can also help you keep certain assets, such as your home and your car.

One of the biggest disadvantages of Chapter 7 bankruptcy is that it can have a negative impact on your credit score. Additionally, Chapter 7 bankruptcy does not allow you to reorganize your debts like Chapter 13 bankruptcy does.

Chapter 13 bankruptcy has a few advantages over Chapter 7 bankruptcy. For example, Chapter 13 bankruptcy can help you keep certain assets, such as your home and your car. Additionally, Chapter 13 bankruptcy can help you reorganize your debts so that you can pay them off over time.

One of the biggest disadvantages of Chapter 13 bankruptcy is that it can have a negative impact on your credit score. Additionally, Chapter 13 bankruptcy requires you to make payments to your creditors for three to five years.

 

Bankruptcy process

Once you have decided which type of bankruptcy you will file, you must gather all of the required paperwork. This paperwork includes a list of your creditors, a list of your assets and liabilities, and your income and expenses. You will also need to take a credit counseling course before you can file for bankruptcy.

After you have gathered all of the required paperwork, you will need to file your bankruptcy petition with the court. Once your petition is filed, your creditors will be notified and given the opportunity to object to your bankruptcy case. If there are no objections, your case will move forward and a trustee will be appointed to oversee your case.

If your creditors do object to your bankruptcy case, they will have the opportunity to file a motion to dismiss your case. This motion must be filed within 30 days of the date you filed your bankruptcy petition. If the court grants the motion to dismiss, your case will be closed and you will not be able to declare bankruptcy again for eight years.

If your creditors do not object to your bankruptcy case, the court will hold a hearing to determine if your case should be dismissed or not. At this hearing, you and your creditors will have the opportunity to present evidence and argue your respective positions. After the hearing, the court will make a decision on whether or not to dismiss your case.

If the court dismisses your case, you will not be able to declare bankruptcy again for eight years. If the court does not dismiss your case, your bankruptcy case will proceed and a trustee will be appointed to oversee your case.

The trustee is responsible for collecting and selling your assets to pay off your creditors. Once all of your assets have been sold and your debts have been paid, your bankruptcy case will be closed.

If you are considering declaring bankruptcy, it is important to speak with an experienced bankruptcy attorney. An attorney can help you understand the process and ensure that you take all of the necessary steps to protect your rights.

 

What do you lose if you declare bankruptcy?

One of the biggest things people worry about when they consider bankruptcy is what they will lose if they declare bankruptcy. The answer to this question depends on the type of bankruptcy you file.

If you file Chapter 7 bankruptcy, also known as liquidation bankruptcy, your non-exempt assets will be sold to pay off your creditors. Once your assets are sold and your debts are paid, your bankruptcy case is closed.

If you file Chapter 13 bankruptcy, also known as reorganization bankruptcy, you will propose a repayment plan to the court that lasts for three to five years. This repayment plan details how you will repay your creditors with your income. Once you have made all of your payments, your bankruptcy case is closed.

 

How bankruptcy affect for credit score?

One of the biggest concerns people have when they consider bankruptcy is how it will impact their credit score. The answer to this question depends on the type of bankruptcy you file.

If you file Chapter 7 bankruptcy, also known as liquidation bankruptcy, your credit score will take a significant hit. In fact, your credit score will likely drop by 100 points or more.

If you file Chapter 13 bankruptcy, also known as reorganization bankruptcy, your credit score will not be impacted as significantly. In fact, your credit score may only drop by 50 points or so.

 

Sources: 

https://www.uscourts.gov/services-forms/bankruptcy

https://www.canb.uscourts.gov/faq/general-bankruptcy