What are the different types of bankruptcy that apply to individuals? There are two, Chapter 7 and Chapter 13. You may have heard of Chapter 11 but that is for businesses not individuals.

Effective October 2005, Congress made sweeping changes to the bankruptcy laws that gave consumers more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7. Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car, that they might otherwise lose through the Chapter 7 bankruptcy process. 
Basically in Chapter 13, the court can approve a payment plan that can run up to five years. This process lets you pay off today’s debts with future earnings. Obviously you have to have a steady source of income to qualify for this filing.

Chapter 7 is known as straight bankruptcy, and involves liquidation of all assets that are not exempt. Exempt property may include automobiles, work-related tools, and basic household furnishings. Other property could be sold by a court appointed trustee or given directly to a creditor as payment of your debt. There is also a limitation of how much you can earn during this process. It is not designed for you to profit by not having to pay your debts.

Another difference between the two is the amount of time that must pass before you can refile. With Chapter 7 the waiting period is 8 years. With 13 it is two years.

Both types of bankruptcy can get rid of unsecured debts and stop foreclosures, repossessions, garnishments and debt collection activities. Both can provide exemptions that allow people to keep certain assets, although exemption amounts will vary by state. Obligations that cannot be satisfied by either form of bankruptcy include child support, alimony, fines, certain taxes and student loan obligations both government and privately funded.

Unless you have an acceptable plan to satisfy your debt under Chapter 13, the court usually will not allow you to keep property when the creditor has security lien on it. This could include your home as well as well as boats, vacation homes, recreational vehicles etc.

As part of the new law, persons seeking to file under either chapter have to have attended a government approved credit counseling course within six months of filing. The idea here is to try and solve the credit problem without taking legal action. The second major change just involves Chapter 7. Today you have to satisfy a “means test” to confirm your income does not exceed a certain amount. This amount will vary by state. You can find those limits here.

Bankruptcy is an emotional time but a necessary step for those who absolutely need the relief.

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Unsurprisingly, there are a lot of usually asked bankruptcy questions. Unfortunately, this is in all likelihood not shocking as bankruptcy is one of the most difficult situations anyone can face. Bankruptcy should invariably be the absolute last resort and only be pursued if you are crippled with large debts, incessantly receiving call after call from creditors , and you are determined to find a way out.

Before starting the bankruptcy process and the complexities of the paperwork, you need to ask yourself a couple of questions that are raised often and which you are going to need to have the answers to.

Who Will Find Out I Am Bankrupt?

To a greater extent than any other, this specific question is one of the most commonly asked of bankruptcy questions. You need to know exactly who needs to know about your situation once you have filed for bankruptcy. You might be preparing to apply for a different job in the not-too-distant future or you may wish to apply for a loan. You will want to know what data people have the ability to get and if they can determine you have filed for bankruptcy.

If you have a number of large clear and free assets, a letter will be sent to every one of your creditors informing them of your intention to file for bankruptcy. Do not worry about this; this letter will put a stop to the phone calls chasing you for money. When you file for bankruptcy, this data is made public permitting anybody access to it if they wish to see it.

Which Assets Can I Keep?

Another standard bankruptcy question you might want to ask is which of your assets you are permitted to keep. The great news is that you will no doubt be permitted to retain a lot of your assets and possesssions. However, you must bear in mind that you do owe money and that some of your assets will be utilized to handle the money that you owe to your debt holders.

When you file for bankruptcy, a note of your assets will be made. Any assets which belong to you at the time of bankruptcy will be considered. If those assets have a resale value bigger than the amount you owe on the assets (removing any exemptions), they will be turned over to your bankruptcy trustee and utilized to handle your debt. This means that much of the hard work will be done for you and you can be assured that the payments to your debt holders will be handled efficiently.

What Happens To My Earnings?

If you are working a job when you file for bankruptcy, any wages you earn will be paid to you directly. However, this is just for the present time until you have bills that need to be paid.

These are only a few of the bankruptcy questions that are asked. It is worth spending some time to learn as much as you can about bankruptcy so that you can be positive it is the correct option for your situation.

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It is important that you try to avoid going into closure of all costs. There are many legal issues that can arise if you miss payments and allow your home to end up in a foreclosure. Basically how it works is that if you are late for more than four months bank will issue a notice that you need to evict her house within 20 days. The problem is that you have legal rights and in some cases the bank cannot throw you out on the street. You have right into your bank and try to come up with a solution that works for you and your lending institution. During these tough economic times many are facing closure so you need to know your legal rights.

Most banks do not want to own your home because they will have to turn around and try to sell it in a down market and this can be very difficult for them. You are always better off to have a good line of communication with your bank so that you can come to terms and save your home from foreclosure. This is one of the worst economic crisis is our country has ever seen and as foreclosures continue to rise most banks want to work out a solution. You should never feel like there is no option for you and you have to do is legally let your house go.

Remember legally when it comes to foreclosure you have a lot of options available for you. You need to have an open line of communication with your banker so you can work out a payment option. Your bank does not want on your house and have to turn around and try to re-sell it. Once you come to an agreement you can stay in your home and continue to make payment and legally the bank will be happy because they will no longer have to worry about your situation and take legal action.

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For more information please visit: http://www.floridalawattorney.com