If you simply cannot fulfill your obligations to your creditors, then you have the option to file for either chapter 13 bankruptcy or chapter 7 bankruptcy.
There is a voluntary bankruptcy, which is when you file for bankruptcy yourself, and there is an involuntary bankruptcy that is when your creditors are the ones that initiate the process of filing bankruptcy.
When it comes to voluntary bankruptcy there are two options. You can file for chapter 13 bankruptcy or you can file for chapter 7 bankruptcy. These are your options so you should know what you are doing before you file for bankruptcy.
When you file for Chapter 13 Bankruptcy , the court approves a repayment plan that allows you to use your future income to pay off a default during a three-to-five-year period, rather than surrender any property. You will have to satisfy some of the secured loans and the other debts before they will be discharged. After you have made all the payments under the plan, you receive a discharge of your debts. When you file for Chapter 7 Bankruptcy .
and it is granted to you, then you will have to surrender your properties, or at least the ones that were not exempted by the law. These will be surrendered to the trustee who will liquidate them and use the money to help pay off your creditors. It does not matter if you own enough property to pay off the debts in full, they will still take the property and use as much as they can to help pay your creditors. After this process the debts will be discharged and you will not have to pay on them again. You can receive a discharge of your debts through Chapter 7 only once every six years.
Depending on your situation and your debts will depend on whether you file for chapter 13 bankruptcy or for chapter 7 bankruptcy. Either one can be very helpful when you are so far in debt that any other option will not help.
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