content :: Business :: General 09

How Does Bankruptcy Work?

Important Info on what you're looking for. Based on popular searches. Of course, bankruptcy is your last resort. It is tough but provides a legal remedy for your financial situation. Bankruptcy is a 3-step process: 1. You must first file in federal or state court saying you are “insolvent” – meaning you have no cash or assets (things you can sell) to pay your bills. 2. You have to arrange a repayment plan with creditors and the court. 3. You “discharge” – meaning settle your debts with creditors for usually a lower amount than the original bill. This gives the creditors some of their money back. Pros and Cons: Pros:1. Legal protection from creditors2. Takes care of most of your debt3. You may get to keep your home4. May stop financial ruin5. Enables a fresh start Cons:1. Bad Credit2. Still have to pay some debt3. Have to go to court4. May loose your assets5. Loss of privacy (usually they print your bankruptcy in the paper) What if I don’t file bankruptcy – what could happen? Bad credit rating – making it hard to ever borrow again Creditors may sell your property you put up as collateral – like your car or house Lawsuit – and if you lose, you’d have all the legal costs from both sides plus your bills Garnishment – your wages could be garnished up to 10% to pay creditors Types of Bankruptcy Chapter 7 – straight bankruptcy This is when you sell everything and pay back creditors. You can keep your house, but must pay taxes, alimony, fines, and student loans. Chapter 13 This allows you to keep your stuff, but the court appoints a trustee to help you with your wages and pay back your creditors usually within a 3 to 5 year window. Hopefully, this information has helped your situation, but please, it is always smart and sometimes required by law, to consult with an attorney before filing. About The Author Stuart Simpson collects information and tries to find ways for people to stave off bankruptcy at http://www.bankruptcy-chapter7.com This article was posted on March 01, 2005some content courtesy ArticleCity.com If you didn't find what you're looking for above. Check the navigation menu on the left. We're sure to have the information that you require. Thanks.