What is bankruptcy? A simple explanation for a complicated

If you have financial problems due to a number of debts you should consider the option of bankruptcy as thousands of other Americans. I would like to take this little opportunity to explain in a simple, basic and in legal terms, which may find confusing.

When we talk of bankruptcy (in personal terms), there are a number of different options, most of the time dealing with personal debt, and therefore we will refer to two specific situations: Chapter 7 and Chapter 13. For purposes of brevity only explain these two types of bankruptcy.

Chapter 7 is about to start again. A judge will completely erase all your debts. While this looks more positive, this process is much more complex. In this case the judge decides whether to selling possessions to pay debts to creditors. It has no right to retain any property of value. Chapter 7 can be considered as a complete liquidation of all assets.

Chapter 13 is not as drastic as Chapter 7. Chapter 13 requires a judge to order a structure to make payments to all those to whom you owe. This plan is organized for a payment within a period of 3-5 years to pay 30% or 50% of your debts, this just depends on what the judge dictates. This type of bankruptcy allows can only play some of their personal property.

Please keep something in mind, since October 2005 with the reform of bankruptcy laws, has become more difficult to file for bankruptcy. To make the process must appear before a judge who will decide whether you have applied foundation based on income and your current situation.

If you are seriously considering bankruptcy, please take a moment to speak with a financial expert. He or she will be able to understand your options and can help prevent an error from which you can repent.