Personal bankruptcy can save you from lifelong financial loss but you need to understand the bankruptcy process and how to file correctly.
Understanding the bankruptcy process as well as the difference in types of bankruptcy can help you through the ordeal in the least amount of stress possible.
Personal bankruptcy is technically when your debts are in excess of your assets and become unmanageable. Debts can include mortgages and personal loans.
The bankruptcy filing will include: 1. A list of all your assets, things you own, and your liabilities or debts 2. A list of all creditors
There are six types of bankruptcy under the law though personal bankruptcy is usually only filed in two types.
Most personal bankruptcies under chapter 7 are ‘no asset’ filings where the individual doesn’t have anything of value that can be sold to pay creditors.
Chapter 13 is an adjustment of debts rather than a liquidation. It’s designed for debtors with income high enough to repay some of their debt but still need help with the overall burden.