Bankruptcy definition states that it's the law which gives a new start to those individuals who are unable to pay off their debts due to the circumstantial financial stringency by liquidating their assets to pay off their outstanding debts. On some occasions even a repayment plan is created. Bankruptcy laws also provide assistance to troubled businesses and offers orderly distributions to their creditors by the process of reorganization or liquidation.
You would obtain much information pertaining to bankruptcy on net, but the relevance of this bankruptcy info should be checked before completely relying upon it. When we speak about our US Fed laws, bankruptcy is generally of six types, which are namely Chapter 7, 9,11,12,12,and 15. Among these the most common types used frequently are chapter 7 and chapter 13. Statistics reveal that more than 65% of the filings are under chapter 7. Mostly all the corporate or businesses file for chapter 7 bankruptcy. Followed by these two in rank is the chapter 11 bankruptcy. As per the Fed Laws, bankruptcy cases cannot be filed in state courts and needs to be files in a federal bankruptcy court.
Individuals normally file for bankruptcy when they are left with no option to pay off their debts incurred. Though the results of it are long lasting, but in their helplessness they are forced to take this debt management option. Thought you are discharged of your debts by this, but its presence remains in your credit report for the next ten years, which could make your life ahead pretty difficult to obtain a credit, buy a home, get insurance or even in cases of getting a job!
Mostly individuals file for either the chapter 7 or chapter 13 bankruptcies. Filing for a bankruptcy also incurs costs consisting of the filing fees of few hundred dollars, and the hired attorney's fees.
Chapter7 bankruptcy generally known as the straight bankruptcy allows the individual having a consistent flow of income to keep his property like the mortgaged house or car etc, which else might have been lost under the bankruptcy process. It's the simplest and fastest. Under this chapter you would need to wait for the next eight years to file for bankruptcy again under this same chapter.
Chapter 13 bankruptcy is basically the rehabilitation payment plan for individuals with a steady source of income, and thus is also known as the wage earners bankruptcy. Here the court allows the individual to use your income to pay off your debts within the three-to-five-year span, rather than surrendering your assets. You are discharged only after you pay off all your debts. The waiting period for this is much shorter of about only two years in contrast to the 8 long years for the chapter 7 bankruptcy.
Apart from all the above mentioned bankruptcy info, both these types of chapter 7 & 13 bankruptcies frees you from unsecured debts. It also puts an end to foreclosures, repossessions, garnishments, utility shut-offs, and debt collection activities. But when bankruptcy definition is explained one thing to be kept in mind is that never erases child support, alimony, fines, taxes, & a few student loan obligations.