Mounting debt and an uncertain economy have spurred many individuals into contemplating bankruptcy as the answer to their financial difficulties. In today’s world of credit scores, it is essential to maintain a high score in order to survive economically in the world. With an overabundance of unpaid bills, loans, and credit card debt, bankruptcy has helped many people rise out of the ashes and begin again with a clean financial start.Understanding the process of bankruptcy can be just as confusing and intimidating as the decision to file may have been. The most difficult aspect to grasp regarding bankruptcy is which type to file. There are basically two types of bankruptcies, chapter 7 and chapter 13. A chapter 7 bankruptcy is the most common type filed. Chapter 7 bankruptcy allows for the individual debtor to discharge the majority of debt incurred while protecting any nonexempt property equity from being seized in the process. Chapter 13 bankruptcy is used in the matter of business and individual company bankruptcies. Chapter 13 bankruptcy allows the business to repay certain debt. It also allows for personal property such as automobiles, houses, and necessary assets to remain untouched while the debt is being repaid. The main question many people have regarding chapter 7 bankruptcy is why it is called a liquidation strategy? The term liquidation in respect to bankruptcy can be defined as a total bankruptcy which gives the debtor the ability to keep some of their assets such as clothing, household goods, and cars. The rest of the personal assets may be sold off in order to pay for some of the incurred debt.
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