When you hear the word bankruptcy, what words or thoughts come to mind? For me, I think of things like incompetent, last resort, and surrender. But by definition, bankruptcy doesn't sound so scary. Simply stated, a bankruptcy occurs when a borrower has used all other options for debt relief, and is still unable to pay back their debt to lenders.
So which bankruptcy option should we choose?
Well, before we answer that question, lets first attack what the option looks like.
Up first we have a chapter thirteen bankruptcy. Within the confines of this chapter we find that debtors are typically on a steady income, end up paying a trustee of the courts to pay their bills for them, and are ensured that foreclosure and repossession will not occur. This option allows for a payback of about ten to one hundred percent over a three to five year period.
At bat next we find a chapter seven bankruptcy. A chapter seven is most commonly used by individuals, couples, and businesses. Within the structure of this chapter we find that debtors' assets can either be exempt or not exempt, and therefore, can either be sold or not be sold off by trustees. The trustees then use that money and pay off the debtor's debt.
So now, ask yourself again, which chapter should you choose to best fit your needs for debt relief.
