Bankruptcy is an ideal way to get rid of debts. However, things can be quite confusing for the layman as the terms are often misunderstood. Though bankruptcy is meant to legally get rid of huge amounts of debts, lawyers of Dallas based bankruptcy law firm Recovery Law Group, inform that not all debts get discharged during the process. Depending on which chapter of bankruptcy you choose to file bankruptcy under, your debts can be reorganized, discharged or left as such. To know details about your options, consult with bankruptcy lawyers at 888-297-6023.
Chapter 7 Bankruptcy
If you want a quick discharge of several debts without making any payments towards them, this is your best bet. Also known as Liquidation Bankruptcy, it typically gives the debtor a discharge within 3-6 months of the bankruptcy filing. Majority of the debts discharged in this bankruptcy chapter include unsecured debts such as credit card bills, personal loans, medical expenses, etc. If loans such as these and other nonpriority unsecured debts like business loans, private student loans, and utility bills, etc. constitute a majority portion of your debt, then you should opt for this chapter of bankruptcy.
It is important to keep in mind that secured debts, such as those against which the creditor has collateral (house mortgage, car loan, etc.) and unsecured priority debts like alimony, student loan, child support, certain government taxes, etc. cannot be discharged. The same holds true for any debts which are related to fraud.
Chapter 13 Bankruptcy
This chapter of bankruptcy is known as Reorganisation Bankruptcy. In this case, while filing you can include all kinds of debts. A repayment plan is devised depending on your disposable income and the debts are paid over a period of 3-5 years. Any unsecured nonpriority debts which remain after this are discharged. During the repayment plan, your house cannot be foreclosed, and your vehicle repossessed if you keep making payments towards those loans. This is the best option available if you wish to prevent foreclosure, repossession or want to put a stop to interest build-up on tax debts.
Though it may seem easy, filing for bankruptcy can be quite difficult, especially if you miss out on any nuances. It is therefore advisable to consult a bankruptcy lawyer to help you get out of your huge financial problems by filing for bankruptcy.