Personal bankruptcy is often pursued through one of two processes: Chapter 13 bankruptcy or Chapter 7 bankruptcy. While Chapter 13 bankruptcies allow individuals to keep their property and repay their creditors over time through the execution of repayment plans, Chapter 7 bankruptcy takes a very different approach to debt settlement. Chapter 7 debtors generally do not have any extra income to create repayment plans and, therefore, are required to sell off or liquidate some of their property to pay down their outstanding financial obligations.
This may sound incredibly overwhelming, but individuals should know that the liquidation process will not leave them completely destitute. Bankruptcy filers must have some assets to rebuild their lives with when their Chapter 7 discharges are achieved; therefore, some property is exempt from liquidation.
In some cases, a debtor may be able to exempt their home, car, and other items of personal property, so that once their Chapter 7 bankruptcy is completed, they are able to move forward. State and federal exemptions can differ for Chapter 7 bankruptcy filers, so individuals should speak with local attorneys to plan how their liquidations will proceed.
Not everyone qualifies for Chapter 7 bankruptcy and those who cannot use its protections to get out from under their financial burdens may be able to pursue Chapter 13 bankruptcy, instead. Bankruptcy is a good option for many individuals who struggle to stay ahead of their bills and other financial obligations. To learn more about bankruptcy, readers may speak with knowledgeable bankruptcy attorneys.