The Chapter 7 bankruptcy is probably the one most known as it is generally the straight forward liquidation type of bankruptcy. In general Chapter 7 eliminates most of your debts and the ones that remain are paid off as your assets are liquidated. With Chapter 7 bankruptcy there is no repayment plan like there is with a Chapter 13 bankruptcy. When you file a Chapter 7 bankruptcy the date of filing sets the limit of when creditors can place a claim on assets to be liquidated. This means that if a few days after you filed you Chapter 7 you came into a large win at the casino in Vegas, then the creditors have no claim over that win as it happen after you filed for Chapter 7. However there are some quirks with these rules as well, which has inheritances, life insurance and property settlements are not safe until 180 days after you have filed. Most Chapter 7 bankruptcies involve no or very little liquidation of assets as most are non-asset bankruptcies. This is because the assets are not worth anything or there are no assets at all. Chapter 13 bankruptcies are different in that you are agreeing to a repayment plan for your debts upwards of a 5 year period. By agreeing to a Chapter 13 repayment plan means that you do not have to liquidate any assets for the repayment plan. These repayment plans must be court approved, where both the creditor and yourself must obey the court’s ruling, otherwise the court can impose quite severe penalties to the offending party. Chapter 13 requires you to stick to a budget that covers reasonable lining expenses. Usually the definition of reasonable living expenses is based on your actual reasonable expenses. If your income is above the average for your state then the reasonable living expenses is based on the Internal Revenue Collection standards.

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If you want to get out of debt and as quickly as possible, you might consider filing for bankruptcy. Bankruptcy is one of your quickest options to get out of debt, but it doesn’t mean it is the best choice for you. Before making your decision, there are some things you need to know first. Your credit score will suffer. What is your main reason for wanting to get out of debt? Is it because you want to clean up your credit to buy a new home? If so, your mindset needs to be changed. Bankruptcy will get you a lower credit score for around seven years. Moreover, lenders will check your credit report and see that you avoided paying your debts in full. This decreases your chances of you getting that mortgage you were hoping for. If you are just looking to stop the collection calls and letters than bankruptcy might be okay. Bankruptcy isn’t your only option. There are many ways to seek debt relief and not just short term relief, but long term relief too. See, bankruptcy will help eliminate your past due debts. What you need to consider though is your current bills. Do you have enough money to pay them or will you just start accumulating debt all over again? If so, you will be back at square one and you are limited in how often you can file for bankruptcy in a certain time frame. It might be best to go with credit counseling or debt consolidation, which focuses on not just getting out of debt now but also staying that way.
Bankruptcy doesn’t offer you full protection. There are some things you are exempt from losing in when you file for bankruptcy. As long as your home’s equity is exempt and as long as you can continue to make your payments, you will not have your home automatically foreclosed on. Typically speaking though, bankruptcy does not cover child support, taxes, fines, and student loans. So basically you are able to ruin your credit to just get out from underneath all your credit card debt. For less damage, it might be within your best interest to examine settlement, a great debt relief procedure, instead.

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As a private debtor, meaning your debt is not derived from business conduct but rather from your personal financial situation, you have two basic options to you, chapter 7 and chapter 13. There are numerous benefits to chapter 7 including the amount of time it takes to file. Chapter 7 typically only takes a few months whereas chapter 13 involves a repayment plan that can be spread out for as much as 5 years. When filing chapter 7 your unsecured debt such as credit cards will be liquidated (wiped out) and your remaining debt will be paid out of any income that exceeds your cost of living determined by the courts, this income will be divided by your creditors. If there is any outstanding debt after the end of the payment period then it will be discharged by filing chapter 13. The first step to filing chapter 7 is to see if you qualify for self filing. There is a test that will indicate if your situation is conducive to filing without an attorney. This test is known as a means test. This test will basically determine the level of your situation and see if you need to settle the situation before the courts with the assistance of an attorney. There is an extremely large amount of paperwork required for filing chapter 7. To simplify this process you may want to consider contacting an online bankruptcy service, this service is not an attorney but rather specialist that will walk you through the process. These forms are rather complicated so it is important that you get assistance. It is usually best to find a reputable bankruptcy attorney who can assist you with any bankruptcy proceedings.

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