There Are Two Types Of Bankruptcies You Should Be Aware Of

July 29, 2010 · Filed Under Declaring Bankruptcy

We all know that bankruptcy means that you will be relieved of your debts and most of the time the creditors will discharge you from your obligations. However are you aware that there are two type of bankruptcies that that you should be aware of:

Chapter 7 Bankruptcy

What is chapter 7 bankruptcy you ask? Well this is the one that most people tend to choose. It is where all your debts are cleared and gives you a “fresh start.” You can choose to keep some of your belongings like your car and your house.

This is the one that most people use since it relieves them completely from the burden of their finances. This was also the one that I chose to do; I figured since I wanted to get rid of all my debt I chose the “fresh start.”

Chapter 13 Bankruptcy

What is chapter 13 bankruptcy? This is where you have a strong enough income coming in; however the interest rates or for whatever reason you are behind and having difficult paying your financial obligations.

This type of bankruptcy is similar to a chapter 7 bankruptcy except that you still pay the creditors that you owe money to and it is paid through a trustee that is appointed to maintain a debtors bankruptcy estate.

I was told when I talked to my attorney that once you negotiate a monthly payment with the trustee; then this can not be changed. So if you decide to declare a chapter 13 then you definitely want to speak to someone who knows how to explain the ordeal so that you know what you are doing.

Once the attorney explains the situation to you then you will decide which one you want to file. If you decide to go through an attorney to file one of these types of bankruptcies; then you are going to discover that it is less expensive to file the chapter 7.

Make sure that you take the time to decide which one you want to file; because once you decide to “move forward” then you are not going to be able to change your decision. If you decide to file; then one of the most important things that you are going to have to understand is how to begin rebuilding your credit. Click Here