The choice to file for bankruptcy is made by thousands of Americans every year. Many declare personal bankruptcy in the state of Florida and get a fresh financial start. While some may be considering chapter 7 or 13 as an option, others may wonder what happens when a person files for bankruptcy.
Bankruptcy is designed to help those who have gotten in over their heads, so to speak. One rule of thumb for some is that, if a person owes more than they can make in a year, they may want to file chapter 7 or 13. Chapter 7 is the most common type of personal bankruptcy filed in the country. In this kind of agreement, the court appoints a trustee who will sell off most of the possessions and assets of the client in order to pay off his or her loans.
Chapter 13 is geared more toward those who have a steady income and can make payments to keep their possessions. While Chapter 7 allows a person to keep just enough to work and survive, Chapter 13 makes it possible for the client to keep much more of his or her possessions. Once a person files bankruptcy, he or she is given an automatic stay.
Once the paperwork is filed, no one can pursue the client for unpaid bills. There can be no further contact by phone, no more nasty letters and no more threats of lawsuits. Unfortunately, any type of bankruptcy will put a dent in a person’s credit. For anyone whose credit is not already in the tank, this can be a disappointing outcome.
While bankruptcy can stay on a credit report for several years, many end up with a higher score after it is all over. Those who are considering Chapter 7 or 13 bankruptcy in Florida may choose to consult with an experienced bankruptcy attorney. He or she can guide the client in which type would be best for his or her needs, and how and when to file the proper paperwork.
Source: mensfitness.com, “5 reasons filing for bankruptcy could save you from life-crushing debt“, Damon Trent, Accessed on May 3, 2017