Distressed In Debts? - Time To Learn About Bankruptcy Facts

In the period of horrible financial situation due to the recession, bad economy, credit card debt, unemployment etc. people are forced to alter their needs to necessitate their day to day needs. These financial incidents not only make monetary disturbances but also contribute commendably to the distress in debts. Thus, people try to resolve the matter by thinking about almost all viable option that can settle their debt.

During this situation comes the time to learn about bankruptcy facts as it can be considered one of the options to relieve the consumer distressed in debts. Bankruptcy is a good option for those having little or no assets as compared to those having number of assets in the form of several houses, classic cars etc. The one having several assets may be forced to liquidate these assets to repay his creditors eventually causing him to lose his valuable assets.

Bankruptcy can be filed under two primary chapters, chapter 7 and chapter 13. Chapter 7 type bankruptcy is more preferable amongst the tow for any average person with its number of benefits. The supreme reason for chapter 7 type bankruptcy being superior over chapter 13 is that it dismisses the debtor's entire unsecured credit card debts with no payback strategy producing a peaceful life for consumer distressed in debts. Under chapter 7 type bankruptcy you have to exempt those property or assets which not covered under protection of law. The trustee assigned to you may, on your behalf sell the property and scatter the profit among all your creditors. Properties that are not exempted are those having secured personal loan. One can forfeit these types of resources in order to discharge the debt.

Chapter 13 type bankruptcy basically is defined as reorganization. Under this type the debtor is allowed to generate or create a three to five years repayment plan which he will follow in order to repay the entire debt. Person filing for chapter 13 type bankruptcy is required to obtain a reasonable and government approved repayment strategy to compensate the entire or the portion of debt over a period of three to five years. The strategy is built considering various aspects including income level and is used to compensate secured as well as unsecured financial debt. Chapter 13 as stated by laws can't go for period longer than five years. Creditors are not allowed to contact the debtor if the repayments are made according to the actual payment plan.