The two primary types of bankruptcy which individuals file for are Chapter 7 and Chapter 13. Each one has its own advantages and disadvantages for the filing party. One of the big issues today is that there is too much inaccurate information available to consumers that makes it difficult to understand the process in which one is most beneficial. Before filing bankruptcy it’s important to understand the difference between debts discharged in bankruptcy and debts settled.
Discharged debts are those in which the courts absolve the filer of responsibility. Generally this is done through filing Chapter 7 bankruptcy. It prevents creditors from making any future attempts to collect this debt. Not every type of debt is dischargeable. Debts which are include credit card debts, medical bills, collection accounts, personal loans, utility bills, business debts, civil judgments, attorney fees, and money owed under lease agreements.
In rare cases individuals may also be able to discharge student loan debt. However, this is not that common. Individuals who are able to win this type of case will be absolved of all of these types of dischargeable debts up to the date of the hearing. When filing this type of bankruptcy, individuals can expect to experience a massive hit to their credit score and the filing to be reflected on their credit report for up to 10 years.
Debt settlement is the process of consolidating debts and pursuing a repayment plan. Most creditors will allow individuals to repay debts over a 3 to 4 year period. However, long-term debt settlement is not typically in the favor of the filer. During bankruptcy court, it is possible to pay a one-time lump sum to completely pay off a settled account that results in less interests and filing fees in the long run. This sum might also be less than the original debt was for.
Filing bankruptcy can be complicated. The needs of each individual are unique and therefore may require assistance from a qualified legal professional who specializes in bankruptcy filings. Contact the experienced attorney of SM Law Group today to get start your bankruptcy filings.