Individuals with excessive debt can find relief by filing for personal bankruptcy. Under the US Bankruptcy Code, there are five bankruptcy options for consumers, although only two are usually viable to them - Chapter 7 and Chapter 13.

 

Chapter 7 Bankruptcy (Liquidation)

 

In a Chapter 7 bankruptcy, the court will appoint a trustee whose job is to covert the debtor's assets into cash and distribute the money to creditors. However, there are  exempt properties which the debtor may retain. Most properties are often exempt under a Chapter 7. Because of this, the debtor's assets may not actually be liquidated. In such a scenario, the case is called a "no-asset bankruptcy." Creditors should thus know that, collecting on unsecured claims, they will only be paid if the case is an "asset bankruptcy" and if they can prove this claim before the court. In nearly all Chapter 7 bankruptcies, the court will grant a discharge which erases the debtor's personal liability for almost all dischargeable debts. The process typically takes a few months from the date the bankruptcy petition was filed. Should you need to read more, click here to get started.

 

Chapter 13 Bankruptcy (Adjustment of Debts of an Individual with Regular Income)

 

A Chapter 13 bankruptcy applies to individuals who are employed or receiving regular income from any source. Usually, this is preferred to Chapter 7 since it allows debtors to keep some of their assets, and pay off their debts over a certain period of time. This is typically about 3-5 years. Repayment proposals are usually discussed during a confirmation hearing. During this hearing, the court will also decide to accept or decline the proposals.  This decision mainly depends on the repayment plan's alignment with the Bankruptcy Code. In a Chapter 13 bankruptcy, the debtor can keep some properties and pay his or her creditors at the same time. Related articles pertaining to this are provided in the site at http://www.huffingtonpost.com/news/detroit-bankruptcy/. However, all payments will be coursed through a trustee appointed by the court. Unlike a Chapter 7 bankruptcy, the debtor will not be given an immediate discharge of debts. The debt has to complete the repayment plan before discharge can be granted. However, for the entire period of the repayment plan, the debtor will remain protected against creditor action.

 

It's important to remember that some debts may be non-dischargeable under bankruptcy. The list of debts that can be discharged is different from one chapter  to another of the Bankruptcy Code. If filing for bankruptcy is in your plan, inquire from a lawyer at this website on which debts are dischargeable and non-dischargeable. Filing for bankruptcy means filing a statement of your assets and liabilities, as well as a schedules listing of all people or individuals you owe money. Once this is done, you can be protected from creditor action.