What you need to know about bankruptcy assets
Bankruptcy serves as a real option for those who find themselves unable to pay off their debts. However, one of the main concerns that people have when it comes to bankruptcy is what will happen to their assets. To understand this, we must first explain the two most common forms of bankruptcy.
In chapter seven bankruptcy, your aim is to discharge, or wipe out, your debts completely. The downside, however, is that you may have to forfeit some of your assets in order to pay off at least part of your debt.
In chapter 13 bankruptcy, your debts are not done away with. Instead, you work out a payment plan in which you will pay part or all of your debt (usually within 3 to 5 years). The advantage is that you don't have to give up your assets to help pay your creditors.
As you can see, chapter seven is the best option if you wish to rid yourself of your debt entirely. The major problem with this, besides the damage to your credit, is liquidation. In other words, you will have to get rid of some of your assets to help pay creditors what you owe them.
Now, you probably don't have all that many assets if you've reached the point of filing for bankruptcy. It's no surprise that most chapter seven bankruptcy cases are considered no asset cases, which means that the consumer doesn't have anything worthwhile to sell.
Of course, most people are primarily concerned with their house (and to a lesser extent, their automobile). The details will depend on your state as well as how much your house is worth, but in most cases you have a considerable amount of protection when it comes to your house.
As we stated above, there are many details to be worked out, which is why it is so important for you to find a bankruptcy lawyer to help you through the process. Otherwise, you're unlikely to be able to navigate all of the legal jargon and reach your goal of debt relief.
That doesn't mean that you shouldn't try to learn as much as possible before consulting your lawyer. You should continue to find articles like these because an informed client will make things easier for the lawyer, which can end up saving money in the long run.
In chapter seven bankruptcy, your aim is to discharge, or wipe out, your debts completely. The downside, however, is that you may have to forfeit some of your assets in order to pay off at least part of your debt.
In chapter 13 bankruptcy, your debts are not done away with. Instead, you work out a payment plan in which you will pay part or all of your debt (usually within 3 to 5 years). The advantage is that you don't have to give up your assets to help pay your creditors.
As you can see, chapter seven is the best option if you wish to rid yourself of your debt entirely. The major problem with this, besides the damage to your credit, is liquidation. In other words, you will have to get rid of some of your assets to help pay creditors what you owe them.
Now, you probably don't have all that many assets if you've reached the point of filing for bankruptcy. It's no surprise that most chapter seven bankruptcy cases are considered no asset cases, which means that the consumer doesn't have anything worthwhile to sell.
Of course, most people are primarily concerned with their house (and to a lesser extent, their automobile). The details will depend on your state as well as how much your house is worth, but in most cases you have a considerable amount of protection when it comes to your house.
As we stated above, there are many details to be worked out, which is why it is so important for you to find a bankruptcy lawyer to help you through the process. Otherwise, you're unlikely to be able to navigate all of the legal jargon and reach your goal of debt relief.
That doesn't mean that you shouldn't try to learn as much as possible before consulting your lawyer. You should continue to find articles like these because an informed client will make things easier for the lawyer, which can end up saving money in the long run.
posted by Credit Counseling at
11:40 AM
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