Information about bankruptcy customers should know

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Information about bankruptcy customers should know

Updated: December 26, 2012

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Debt is something a lot of people are struggling to deal with. It is a huge burden that seems incredibly harsh and difficult. Especially when you are plagued by phone calls from various debtors and have no means to pay back what you owe, you just want it all to end. Bankruptcy seems in many cases to be the ideal way to settle and solve these money issues. However filing bankruptcy should not be an ideal option; in fact it has numerous difficulties and black marks associated with it. It would be much better to plan things out, work on a solution that will suit you rather than opting for a bankruptcy.

Chapter 7 bankruptcy

One of the most commonly filed types of bankruptcy is chapter 7 liquidation. Here a trustee is appointed who will sell all of the various assets and property of the debtor and distributes what is obtained among various creditors. Each state has regulations for debtors to keep some property and chapter 7 bankruptcies are mostly no asset bankruptcies. Like with any other form of bankruptcy, a record of this will stay on the credit report for ten years. There will be definite consequences for this action and things are not necessarily simple and quiet after it.

Chapter 13 bankruptcy

Chapter 13 is the next type of bankruptcy that is filed more commonly. It involves a complex reorganization allowing debtors to pay off what they owe from their future earnings. The debtor also can keep some or most of their property in this process. There is of course both voluntary and involuntary bankruptcy. The larger numbers of people are seen to opt for a voluntary bankruptcy. In some cases creditors enforce their right and petition a bankruptcy for someone with large debt that is unpaid since long. Once the bankruptcy is filed or just prior to it there is no collections done and no creditors may approach the debtor for money or call them for the same.

Procedures involved following filing of bankruptcy

Following filing of bankruptcy, the complete property and assets of the debtor is called an estate and the court has an automatic stay that prohibits creditors from collection of any claim before the bankruptcy proceedings. Even if it is a secured loan permission to claim the collateral has to be granted by the same court of law after bankruptcy has been filed. The creditors can also petition to move the stay before the value of the collateral drops.

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