Bankruptcy Basics: A Fresh Start

Bankruptcy with a pen, glasses and a calculator

Bankruptcy laws allow people who can no longer meet their financial obligations a chance to start over. These statutes are complicated with steps that vary from state to state, but the terminologies used and the underlying processes followed are pretty much the same.

The Basics of Bankruptcy

There are two main parties involved in bankruptcy filings: the debtor and the creditor. The debtor can be a company or an individual who owes either a secured or an unsecured debt to creditors. Secured debts like mortgages give your creditors a legal right to foreclose and take possession of your home.

During bankruptcy settlements, you always pay secured debts first. The most common types of bankruptcy filed are Chapter 7 and Chapter 13, but there are several others more, such as Chapter 9, Chapter 11, Chapter 12, and Chapter 15.

When Do You Need A Lawyer?

Hiring a lawyer is not a necessity when filing for bankruptcy if you know what you are doing. However, the bankruptcy process can get quite complicated and may take six months or more to complete.

If you find yourself at a loss in the complexity of bankruptcy laws, then you will need the help of a bankruptcy lawyer here in Taylorsville.

Why File For A Bankruptcy?

Having more debt than individuals or businesses can pay is the main reason why they file for bankruptcy, especially if they will not be able to pay all of it for more than five years.

This gives people and businesses a chance to regroup and start over again, but this is not the only purpose of the bankruptcy code. The badgering phone calls, letters, and other invasive ways of contacting you will all stop once you declare bankruptcy.

Although filing for bankruptcy does have its consequences, it was not created to punish people. Instead, it gives people a second chance. If you are more than $15,000 in debt but do not have the funds to repay it anytime soon, then filing for bankruptcy will benefit you.