Common Bankruptcy Types With Advantages And Disadvantages

Bankruptcy federal court process made to support consumers and businesses extinct

their debts or repay them under the protection of the bankruptcy court. In simple term bankruptcy occurs when a organization or individual can no longer able to pay their debt. This may be down to business failure or simply no money flow. If you declared bankrupt then your non-essential credits and excess income are used to pay off your debts.After a period of time most or all of your huge debts are "discharged" and you can make a new begning.

Common types of Bankruptcy

Chapter 7 Bankruptcy: Chapter 7 bankruptcy is when the court appoints a Trustee who may take and sold ("liquidated") to pay back some of your debt. Most of your debt well be erased.You can keep any property that is classified as exempt under the federal laws available to you (like your clothes, car, and house furnishings).Many debtors who file for Chapter 7 bankruptcy are pleased to learn that all of their property is relieve.

Chapter 13 bankruptcy: Chapter 13 bankruptcy, is also called reorganization bankruptcy.

In aChapter 13 bankruptcy, you don't need to give any property, but you must use your income to repay some or all of what you owe to your creditors over time -- from three to five years, depending on the amount of your debts and income. Chapter 13 requires you to use your income to repay some or all of your debt, you'll have to prove to the court that you can afford your payment obligations. If your income is irregular or not sufficent, the court might not allow you to file for Chapter 13.

If you are thinking to go for voluntary bankruptcy, then you should weigh up the pros and cons of the bankruptcy process first, to decide whether or not bankruptcy is right for you.Take bankruptcy advice from the experts

There are a number of advantages offiling for bankruptcy or being declared bankrupt.

Advantages of filing for bankruptcy

1 You are allowed to keep household things and a reasonable cash to live on

2 Your creditors cannot take any legal action against you

3 Bankruptcy usually lasts for just one year

4 You cannot be fired from your job just because you filed for bankruptcy

Advantages for your creditors

1 Your all assets are shaired to your creditors

2 Payment becomes the responsibility of the trustee

Disadvantages of bankruptcy:

1 A bankruptcy can remain on your credit record for many years and can affect your future deals.

2 You can not use credit cards and bank or building society accounts.

3 You might be publicly examined in court.

4 You will lose credit of original value including your luxury items, your home, any life insurance and possibly your pension.

5 All the credit reference agencies will have your bankruptcy records

6 You can"t involve in any business under any other name.

by: philips21

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