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A Bankruptcy Law Firm Can Help You Choose the Right Chapter

The decision to file bankruptcy is much more complex than most people realize, and a bankruptcy law firm can offer some perspective on what to do. There are many different types of bankruptcy to choose from, depending on your personal situation. The most common types are chapter 7 and chapter 13.

Over the last several years, many Americans have found themselves in a great deal of personal debt and could utilize the services of a bankruptcy law firm. The economy has suffered a severe recession, and many individuals have lost their jobs or been unable to find employment at all. Even when they are lucky enough to find a place to work, they still are not making nearly as much money as they once did. The result is that many people are stuck with overwhelming debt that they cannot manage alone. They are forced to consider filing bankruptcy to relieve some or all of the debt.

As this sort of law is very lengthy and complicated, and there are many different ways of filing, a bankruptcy law firm is your best bet for this kind of specialized knowledge. Choosing the right type depends on your personal circumstances. The various categories are named for the chapters of the Federal Bankruptcy Act. Specific sets of laws and rules apply to each chapter, and some are more commonly filed than others. The two most common types are chapter 7 and chapter 13.

Chapter 7 is usually filed by individuals, but may also be used by some businesses. It is also referred to as liquidation. Under this chapter, the individual or business is able to walk away from most debts by liquidating personal assets. There is a means test for chapter 7, which qualifies debtors based on their income. In order to meet the requirements, your income must be less than the median income for your state. This chapter is often considered the harshest form of bankruptcy because you must give up your personal property.

If you file chapter 7, your assets are collected by a court-appointed trustee. The trustee sells them for cash and uses the money to pay the creditors you owe. You do not have to give up all of your assets, as some of them are exempt according to federal or state laws. Your house is an example of an asset that is usually exempt. When you file under chapter 7, the law restricts you from filing under this chapter again for six years. The benefit of this category is that you can walk away from the debt without having to adhere to a payment plan over several years. Under chapter 13, this is exactly what you are required to do.

Chapter 13, also called reorganization, is designed for a person with a steady income source. Some small businesses can also use this chapter. The purpose of filing under chapter 13 is to restructure your debt into more manageable terms, usually allowing you to lower or completely eliminate the interest you are paying. You are typically restricted to a five year time period in which the repayment plan must be completed. Under chapter 13, some creditors may only be repaid a percentage of the debt, while others are paid in full. The biggest benefit over chapter 7 is that you are able to keep your property. There is also no time limit during which you are unable to file chapter 13 again.

There are several other chapters for filing bankruptcy, and choosing the right one depends on your specific set of circumstances and consulting with the right bankruptcy law firm. If you are considering filingComputer Technology Articles, many attorneys offer free consultations to help you determine whether bankruptcy is your best course of action.

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Do you find yourself trapped in debt, with the phone ringing off the hook from creditor calls and seemingly no way out, a qualified Somerset bankruptcy law firm can connect you to a compassionate professional. Learn more at

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