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Key takeaways. There are two common types of bankruptcy: Chapter 7 and Chapter 13. Filing for bankruptcy is a time-consuming process that can take years to stop affecting your finances.
In Chapter 7, the process usually takes a few months before eligible debts are discharged, and you may lose some assets. In Chapter 13, you make monthly payments according to a structured plan.
The frequency of applying for bankruptcy depends on which type of bankruptcy you’re filing, something known as the 2-4-6-8 rule. Filing Chapter 13 after Chapter 13 : Two years. Filing Chapter 13 ...
Chapter 7 of Title 11 U.S. Code is the bankruptcy code that governs the process of liquidation under the bankruptcy laws of the U.S. In contrast to bankruptcy under Chapter 11 and Chapter 13, which govern the process of reorganization of a debtor, Chapter 7 bankruptcy is the most common form of bankruptcy in the U.S. [1]
A bankruptcy discharge is a court order that releases an individual or business from specific debts and obligations they owe to creditors. In other words, it's a legal process that eliminates the debtor's liability to pay certain types of debts they owe before filing the bankruptcy case. [1]
Type of bankruptcy. What it means for you. Chapter 7. Often referred to as liquidation, this type of bankruptcy means selling off your non-exempt assets to repay your debt.
It is common that the debtor makes one lump-sum payment in exchange for the creditor agreeing that the debt is now cancelled and the matter closed. Some settlements are paid out over a number of months. In either case, as long as the debtor does what is agreed in the negotiation, no outstanding debt will appear on the former debtor's credit report.
Declaring bankruptcy isn't your only option. Read on to explore a few other choices that may provide better outcomes for your financial situation. ... Before You File for Bankruptcy, Consider ...