Liquidate or Reorganize?
It is a very good idea that if an individual is overwhelmed with debts must have a fresh start. Thank goodness to our founding fathers that they included bankruptcy into our constitution. One of the things written to it is the first permanent bankruptcy law that has been in effect since 1898. It was replaced with a comprehensive new law in 1978, now the important structure remains going until this present day.
Why is bankruptcy always the last option?
Filing for bankruptcy has been the last resort in most cases. It is probably because there are some available options that do not have any long-lasting or sometimes lifetime consequences. In addition, filing for bankruptcy may require a debtor to hire a bankruptcy lawyer riverside which can be costly in terms of money as well as time.
What are the common bankruptcy chapters?
There are six different types of bankruptcy but there are only two common chapters used by most individuals and married couples. It is the chapter 7 bankruptcy which is usually called the liquidation bankruptcy and the chapter 13 bankruptcy which is also known as the reorganization bankruptcy.
Chapter 7 bankruptcy is also known as a liquidation bankruptcy. It is because particular assets of the debtor could be liquidated or sold by the court-appointed bankruptcy trustee. The money that will be gathered from the sale would be used to make payments to the creditors. On the other hand, the debtor is allowed to keep the key assets that he possesses. For instance, the debtor is allowed to keep a portion of equity in his house and a certain amount of equity in his car. It also gives a debtor a chance to keep his job-related tools and household items. If bankruptcy is filed as a married couple expect that the amount given in equity will be doubled.
Filing for chapter 13 bankruptcy allows the debtor to reorganize his finances. Chapter 13 is also called a reorganization bankruptcy. It is to pay off selected debts and the rest will be forgiven. An individual can only file for a chapter 13 bankruptcy if his debts do not go beyond a certain amount. The debtor will be required to make a three to five-year repayment arrangement for his creditors. Unluckily, many individuals fail to complete a chapter 13 bankruptcy. If the debtor failed he must consult a Riverside bankruptcy attorney on what to do while others choose to change it to chapter 7.