Many individuals who are experiencing overwhelming levels of debt and want to obtain a financial fresh start consider filing bankruptcy. In the context of consumer bankruptcy, as opposed to a bankruptcy filed by a business, there are 2 main types of proceedings: chapter 7 and chapter 13 proceedings. A chapter 7 bankruptcy is a liquidation proceeding, under which all of the debtors assets which are non-exempt, i.e. exempt from collection by creditors by law, are pooled together and liquidated by the bankruptcy Trustee, with the proceeds then being distributed to all applicable creditors on a pro rata basis. Once this is accomplished, generally a debtor may then receive a discharge of his or her preexisting debts. In a chapter 13 bankruptcy, a debtor may propose to keep all of his or her assets in exchange for promising to pay off debts over a period of time out of future income. A common scenario in which a chapter 13 bankruptcy is utilized occurs when a debtor is in default on his or her mortgage loan and is facing foreclosure but wants to keep his or her home. A chapter 13 bankruptcy payment plan can allow a debtor to cure mortgage arrears over time and potentially avoid foreclosure.
Posted on: Thu, 19 Jun 2014 17:12:14 +0000
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