How Long In Bankruptcy

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The bankruptcy process is a much shorter process for individuals who file Chapter 7, as opposed to the other chapters in bankruptcy law. The reason for this is because Chapter 7 bankruptcy simply involves liquidation of assets. Individual bankruptcy under Chapter 13 will be a longer process, due to the required repayment plan that must be completed.

Chapter 7 bankruptcy requires an appointed trustee to view the debtor's assets and determine whether they are exempt or not exempt from liquidation. The trustee then pays off the debtor's debt with the money that is generated from the sales of all the debtor's assets. The entire process is relatively short. It normally takes from three to six months to complete the entire Chapter 7 bankruptcy process.

Individuals who file Chapter 13 bankruptcy will undergo a much longer process; chapter 13 bankruptcy requires the debtor to repay a portion or all of his or her debts in three to five years. Those debtors whose income is below their state's average income level will be required to repay their creditors in three years, thus resulting in three years of the bankruptcy process. A debtor that qualifies for Chapter 13 bankruptcy and has income greater than his or her state's average income level will be required to repay creditors in five years. This results in five years of bankruptcy. Chapter 13 bankruptcy will not last longer than five years.

Chapter 12 bankruptcy, intended for family farmers and family fishermen, is comparable to Chapter 13 in terms of process time. Family farmers and family fishermen are required to pay installments to their creditors for three to five years. However, under Chapter 12, most individuals' repayment plans last for over three years. Repayment plans that include 100 percent payment on child support and alimony last for over three years as well. If the repayment plan does not include 100 percent payment on child support and alimony, the debtor's plan will last five years.

There are other situations that can shorten or lengthen the bankruptcy process. When a debtor chooses to file for bankruptcy independently, it can be a daunting task and can result in dismissal. Hiring an attorney may help to speed up some of the more difficult processes; however, the required repayment plan periods will not be subject to change because of this.

Bankruptcy is the legal inability to pay debts, or the state of having already declared legal bankruptcy. Because bankruptcy laws can be complicated, due to the many different types, filing for bankruptcy can be confusing and difficult. Therefore, it is highly recommended that you hire a bankruptcy lawyer or attorney to help you with your case. This is especially important if you own your own business and have assets.

Bankruptcy has the ability to give you a fresh financial start in life and can seem very appealing to those who cannot afford to pay their bills as they are due. However, the processes are not for everyone. The timing for which you file for bankruptcy is extremely important. Filing for bankruptcy can affect your credit for years to come and can carry other consequences that you will need to consider before committing to it.

You should consider consulting a bankruptcy lawyer to assess the pros and cons of filing in your particular economic situation. Whether you are someone who feels that you will be able to work out a debt repayment on your own, or feel that seeking counsel will be the best route, or even if bankruptcy is not the best solution currently, you will need to gather some basic information before proceeding any further. Many attorneys will give a free consultation to discuss the benefits and risks of a bankruptcy and what alternatives to bankruptcy are available.


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