18 Dec What Is Bankruptcy? The Basic Types Chapter 7 and Chapter 13
Bankruptcy laws are available to help people who can’t repay debts get a dischargefrom the legal obligation to repay the money owed.
Bankruptcy laws protect honest people
The laws are available to protect honest people who, after paying for necessary living expenses, have no funds left to make payments on their general debts. It isn’t that they don’t want to pay their bills; they can’t pay them.
People need a fresh start sometimes
If you can remember your grade school history, a basic premise of the founding of America was that there would not be a debtor’s prisonif you couldn’t repay your debts.
Two kinds of bankruptcy for most people: 7 or 13
There aredifferent kinds of bankruptcy cases, but most ‘regular’ people consider either Chapter 7 or Chapter 13.
Chapter 7 is appropriate when someone has debt they can’t pay back, and there isn’t enough monthly income to make payments on the debts. Chapter 7 debtors are looking for a the ability to start over with a quickerresolutionof their financial problems.
Chapter 13 might be a better option for people who can pay some of their debt, even if they are not able to pay it all. The goal of Chapter 13 is to provide debtors with an affordable plan that they can live with. Chapter 13 is also very useful to help stop foreclosures and car repossessions, and protect other property from creditors.
Under many circumstances, Chapter 13 can write down unsecured debts just like Chapter 7 can. As a repayment plan it sometimes helps give people the time to pay what they can. Occasionally Chapter 13 debtors are even able to pay all of the debts owed. It works as a court supervised debt payment plan which is more affordable than most other options.
In the right circumstances, Bankruptcy can be a positive experience
Whether Chapter 7 or 13, bankruptcy should be a positive action to help someone get back on their feet but giving them relief from a budget that just doesn’t work and a non-bankruptcy alternativedoesn’t help.
People with balanced budgets are better able to stay in their homes, cover expenses, and provide for their families. Homes owned and maintained help everyone in the neighborhood, stabilize housing prices, and contribute to tax rolls. There is less stress when there is less worry about covering monthly expenses. Families who balance their budgets are able to put more money back into the economy by buying goods, rather than paying interest.