Bankruptcy

Bankruptcy is a status an individual files with the judicial court when the individual finds him or herself unable to repay creditors. Once the court has established that said individual is indeed unable to repay their debts, the court will order that the individual's creditors accept whatever form of financial absolution is deemed necessary--be that by complete dismissal of debts or by a modified repayment plan for those debts. The two types of debt that exist are secured and unsecured. A secured debt is named so because there exists a tangible asset that the creditor may repossess if the debtor's debts are unpaid. These include things like cars, houses, etc. Unsecured debts hold no real tangible collateral against them, and therefore exist solely in the faith that the debtor will repay his or her loan. The most popular form of unsecured debt is credit card debt. Bankruptcy seeks to negotiate or absolve these debts through negotiation with both creditors and the court. Caroline Moore specializes in both Chapter 7 and Chapter 13 Bankruptcy.


Chapter 7

Chapter 7 Bankruptcy is the process of liquidating an individual's assets in order to satisfy the debts that the individual owes to creditors. The possibility of losing physical assets exists during this process, as the task of liquidating non-exempt assets is placed in the hands of an objective third-party called a trustee. While the loss of assets is a possibility, a Chapter 7 does allow the individual to be completely absolved of his or her debts--even if the assets liquidated equal an amount less than the original debt. 


Chapter 13

Chapter 13 Bankruptcy differs from Chapter 7 in that a Chapter 13 is a form of modified repayment of total debts as opposed to complete liquidation and freedom from said debts. If an individual has a steady source of income, that individual may formulate a plan with his or her creditors to repay debts within three to five years. One of the greatest advantages of a Chapter 13 over a Chapter 7 is that debtors may rest assured that some of their physical assets such as a car or home will not be repossessed or liquefied in order to satisfy the debt. In both Chapter 7 and 13, creditors are forbidden by the courts to impose more fines or demand more collections from the debtor.