Kentucky residents struggling with financial challenges and seeking debt relief may be interested to know about how personal bankruptcy might work to help them manage or eliminate debt. The two most common types of individual bankruptcy are Chapter 7 and Chapter 13, which differ from each other in certain key aspects.
Chapter 7 bankruptcy is statistically the most common type of bankruptcy and usually involves a complete discharge of most, if not all, debts owed at the time the bankruptcy petition was filed. Once the bankruptcy petition is filed, a trustee is appointed to supervise the bankruptcy proceedings. The trustee is responsible for liquidating and distributing to creditors any non-exempt assets possessed by the petitioner. An individual may only file for Chapter 7 bankruptcy once every eight years.
Chapter 13 bankruptcy is statistically the second most common type of bankruptcy, which provides petitioners with a suitable payment plan to effectively manage and eliminate their debts over a period of three to five years. Payments are typically determined according to an individual’s disposable income and people are frequently allowed to retain possession of their home, vehicle and other assets as long as the court-ordered payment plan is fulfilled.
Individuals considering filing for bankruptcy due to unpaid bills, medical expenses, credit debt or to stop foreclosure may choose to seek the assistance of a bankruptcy attorney. A bankruptcy attorney might be able to offer advice on which kind of bankruptcy to file for, and assist a person throughout the complex legal proceedings associated with bankruptcy court proceedings, asset liquidation and the discharging of debts.
Source: American Bar Association , “General Comparison of Chapter 7 and Chapter 13 Bankruptcy“, October 01, 2014