Though bankruptcy is a word that you hear and see many times, chances are, you have no idea how to explain it in your own terms. So, what does bankruptcy entail? If you talk about bankruptcy, the word that you can easily associate with it is difficult. There are processes that you need to follow to be able to file for a bankruptcy petition. Understanding the basic meaning of bankruptcy is one of the things that you should know before you push through in filing for a bankruptcy petition. To begin with, bankruptcy is the whole concept of legally permitting people to escape from their financial responsibilities. With this agreement, you get to deal with your financial problems without having to pay off your debts in full anymore. Simply, you get a brand new shot at life. For you to be able to get away from your debts legally by filing for bankruptcy, you need to familiarize yourself with your varied bankruptcy choices.
Personal bankruptcy makes up the most basic kind of bankruptcy. For personal bankruptcy, you can have it in either Chapter 7 or Chapter 13 bankruptcy from the bankruptcy codes. For the first type of personal bankruptcy, the person should get rid of almost all of their assets. The cash from these assets that you make is then split among your creditors. For the latter type of personal bankruptcy, the debtor retains most of their own assets. If you are going for this option of bankruptcy, make sure that you repay your debt within three to five years with the repayment plan you choose.
Another type of bankruptcy option is business bankruptcy applicable to business owners. When the business you are running makes it too late for you to make timely repayments, you can find for this kind of bankruptcy petition. Business owners can file for either Chapter 7 or Chapter 11 bankruptcy. Chapter 11 bankruptcy is similar to Chapter 13 wherein the court allows your business to follow a repayment schedule.
When you file for bankruptcy, you can avail certain exemptions. For example, there are some federal and state exemptions that enable individuals to still file for bankruptcy yet still keep most of their private assets and belongings. Some of the things that you can still hold and not give up include your property, your truck or motor vehicle, and the tools and equipment you have for your job. In some states, they still allow you to remain receiving death/disability, survivor’s, and retirement benefits.
Despite filing for a bankruptcy petition, you have to understand that there are things that still require payment from you. Charges that the judge orders for you to pay as well as taxes are some of these obligations. There are particular debts that your creditors can also dispute. For these scenarios, they will be send to court, and the judge will decide on the verdict.