In the United States you have a constitutionally guaranteed right to relieve all or part of your debt when you cannot make the payments per your agreement with your creditors. As a consumer you are given two major options; Chapter 7 and Chapter 13. An individual who is granted relief under Chapter 7 allows for discharge of all or nearly all the debt whereas Chapter 13 allows the debtor to repay all debts over a period of time.
Getting bankruptcy information in Lancaster can be difficult, especially if you are in the midst of fighting of credit collection agencies and handling harassing phone calls. To analyze the options that are available, one needs time and professional help in the way of an attorney.
Chapter 7:
Before you can file for Chapter 7 you must sit a means test. This test is taken to determine if your income is lower than the average in the state for your family situation. If you fail this test, Chapter 7 is not an available relief; you will have to file Chapter 13.
If you do pass the test and your income is below the mean for your family size then you can declare Chapter 7, in this way you are eligible to have all or part of your debt discharged by the court. It does mean that your liquid assets have to be declared and disposed of; the proceeds are used to give partial payment to your creditors.
Liquid assets in the eye of the law are those that can be quickly turned into cash, these include bank accounts. These assets are referred to as non-exempt. Exempt assets are those which cannot be disposed of to pay creditors; it is the state that defines which is which.
Once the proceeds from the sale of your non-exempt assets has been completed and turned over to your creditors, any outstanding debt is discharged.
Chapter 13:
People who have significant assets will often opt for Chapter 13 bankruptcy. When one seeks bankruptcy information in Lancaster, he or she will find that if their income is sufficient to pay off the bulk of the priority debt in a three to five year period, a repayment plan can be established and approve by the court. Although creditors can object to the plan, it is the court that has final say. For more information, visit Winterbotham Parham Teeple, a PC.
