Knowing what to expect from the bankruptcy process can help calm some of the nerves individuals filing for bankruptcy may have. Personal bankruptcy protection options are an important resource for struggling consumers which is why they should be familiar with how bankruptcy protections work and can help them.
In a recent episode of a popular television show, a wealthy couple must file for bankruptcy and learns they may lose their home, car and the wife’s wedding ring. When a filing party is going through the Chapter 7 bankruptcy process, it is helpful for them to be familiar with how asset liquidation is handled. Chapter 7 bankruptcy is a personal bankruptcy protection option that allows assets to be liquidated to repay creditors. Some assets are protected, or exempted, from the process such as some personal property or jewelry.
Chapter 7 bankruptcy requires the filing party to fully disclose all of their assets. Property is then placed into different categories of priority for repayment. Certain categories of property enjoy protection through the process subject to certain limits that can vary by state. Chapter 13 bankruptcy is another personal bankruptcy option that is not as common because it may not be as quick as Chapter 7, which typically takes 4 months, and is also best for filing parties that have a reliable source of income to follow the repayment plan developed as part of the Chapter 13 bankruptcy process. Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy does not involve asset liquidation.
Chapter 7 bankruptcy can provide a fresh financial start and debt relief because at the end of the process, the filing party will not have to repay all debts they have accumulated. Personal bankruptcy protection, whichever option the filing party decides is best for them, can help struggling consumers who should be familiar with the different bankruptcy resources available.