While most people understand the concept of filing for bankruptcy, they may not be clear on the specifics. Anyone who is facing serious financial issues will want to look closely at what is involved before deciding this is the best way to resolve those problems. Fortunately, sitting down with an attorney makes it possible to learn All about Bankruptcy and make an informed decision.
Understanding the Forms of Personal Bankruptcy
One of the first facts to absorb when learning All about Bankruptcy is that more than one type is available to individuals. A Chapter 13 bankruptcy places the debtor under the protection of the court and involves the creation of a plan to repay all creditors over a specified period of time. The debtor tenders payments directly to the court, which distributes the funds to the creditors.
A Chapter 7 bankruptcy involves the sale of any assets the court deems to be non-exempt. The proceeds from those sales are distributed to the creditors, and the remainder of the debt is dismissed. Non-exempt assets are typically holdings that the court does not recognize as being necessary for an equitable standard of living. That means the car used by the debtor to get to and from work would be considered exempt, but the cabin at the lake would likely be sold to help partially settle the outstanding debt.
Qualifying for Bankruptcy Protection
The attorney will also explain that not everyone qualifies for bankruptcy protection. The court will use what is known as a means test to determine eligibility. People who generate under a certain amount of annual income are likely to qualify. This is true even if they are working full-time. For people who make above that minimum amount, there are other criteria which help determine eligibility.
There is another information that a debtor should know before filing for any form of bankruptcy protection. Work with an attorney who can aid in deciding if filing is possible, what type of protection to seek, and what pros and cons come with filing. With that information at hand, it will be easier to decide if this is the right approach or if the debtor should consider some other means of dealing with the debt.
Visit Stlbankruptcyfirm.com for further details.
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