Although an individual can file for a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, both types involve the same four steps, according to Money Crashers. These steps include providing a financial inventory, receiving credit counseling, attending a creditors' meeting and completing post-bankruptcy credit counseling. Most bankruptcy cases are handled through paperwork rather than court attendance.Continue Reading
Before filing for bankruptcy, a debtor creates a financial inventory that lists debts, income, expenses and property and other assets. Credit counseling must also be completed with a court-approved counselor. After filing, a creditors' meeting is held to discuss the exact terms of discharging or reorganizing the debt. When the terms are agreed to, the debtor must attend credit counseling again to prevent future bankruptcies, notes Money Crashers.
The type of bankruptcy being filed determines how the debt is handled. A Chapter 7 bankruptcy is also called a liquidation bankruptcy because it usually requires a debtor to liquidate assets to pay off some debt, according to FindLaw. Any remaining debt is discharged, or erased. Chapter 7 bankruptcy rules determine who can file for this type of bankruptcy, the type of debt that can be discharged and how to file, which can vary by state. A Chapter 13 bankruptcy is also called a reorganization bankruptcy, because it requires an individual to follow a structured repayment plan to pay off debts over time, notes FindLaw. This is typically within three to five years.Learn more about Debt Law
The court usually grants a discharge in a Chapter 7 bankruptcy four to six months after the petitioner first files the case with the clerk, states Nolo. The time varies according to individual case circumstances and by local jurisdiction processing times.Full Answer >
Filing for Chapter 13 bankruptcy allows property owners to keep their homes, unlike filing for Chapter 7 bankruptcy where the owner forfeits all non-exempt assets, notes HowStuffWorks. However, some states exempt houses from assets that must be liquidated under Chapter 7 bankruptcy.Full Answer >
People may file for Chapter 7 bankruptcy eight years after filing a prior Chapter 7 case or six years after filing a prior Chapter 12 or 13 case, according to Lawyers.com. Chapter 7 bankruptcy is generally used by low-income debtors who have little or no assets.Full Answer >
What happens after the court has issued a judgement against an individual depends on whether the individual pays it or not. If he pays the amount in full, the case is settled, and no further action can be taken against him.Full Answer >