Among the main types of debt management and debt elimination procedures like debt consolidation loans, IVA, debt management plans people being in major debt can choose filing for bankruptcy to become debt free. People, who are in major debt, cannot pay their bills and monthly debt repayment amounts can file for bankruptcy, which is a legal proceeding to get a fresh start. All bankruptcy cases are treated in federal court and the right for filing for bankruptcy is also provided by the federal law. As soon as you are accepted and file bankruptcy all the creditor harassments are being stopped and they are legally banned to collect debts from debtors.
With a bankruptcy all your debts will be discharged meaning all your legal duties of paying the majority of all your existing debts will be eliminated, giving you a new financial start. Repossession and foreclosure in case of missed payments will also be stopped. Wage attachments, extra fee payment requests and debt collection harassments from creditors will be legally banned.
You should not think that all your debt forms and problems will be eliminated by bankruptcy. Certain obligations to secured creditors will not be totally eliminated, because in order to get the collateral back you need to keep making payments on the debt. Bankruptcy will not be able to discharge those debts that arise after bankruptcy has been filed. Furthermore, bankruptcy will not protect existing co-signers on your debt and will not discharge debts related to student loans, divorce, taxes, criminal fines or court restitution orders.
There are two main bankruptcy chapters that are frequently used to eliminate debts. Chapter 7 bankruptcy will eliminate your secured and mortgage debts but in exchange you need to give up property given as collateral. With Chapter 7 bankruptcy your property will be sold and the amount of money given on it will be distributed to creditors to discharge debts. If you are behind mortgage payments and want to keep your home or car a Chapter 7 Bankruptcy is not suited for you.
In Chapter 13 bankruptcy you will be filing in a repayment plan including how you will pay off a part of your debt within 3-5 years. This type of bankruptcy is the best for those who are having mortgage debts and want to keep their home or property, but they must be able to make required monthly payments, which will usually match up the existing mortgage payments. Although you will have to make payments after the period of three or five years your debts will be eliminated.
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