It is most unfortunate, but there are many people who reach the point where their debt has become overwhelming and the only logical solution seems to be for them to file for bankruptcy. There are many reasons why this can happen; a person may have lost his or her job due to the problems associated with the current economic situation, perhaps poor financial decisions were made or it could even be health related. Regardless of the reason, there are a number of things that need to be considered before filing. It is best to speak to a bankruptcy lawyer in Utah to determine which type of bankruptcy offers the best solution for you; Chapter 7 or Chapter 13 being the most common.
Chapter 7 bankruptcy demands that all of the petitioners non-exempt assets be listed and turned over to a court appointed trustee who disposes of them, usually through public auction. The proceeds from the asset sale are used to pay the existing creditors. The person who files for Chapter 7 bankruptcy is often one who has few assets of any real value; an individual who has significant assets that he or she wishes to keep will opt for Chapter 13 in most cases. When a Chapter 7 bankruptcy is discharged by the court, the individual will be free from debt and can go about rebuilding a life.
Chapter 13 bankruptcy is considerably different than Chapter 7. In Chapter 7 your debts are discharged, this is not so in Chapter 13. Chapter 13 bankruptcy demands that a certain portion of the petitioner’s unsecured debt is to be repaid. The bankruptcy court will expect the petitioner and his bankruptcy lawyer in Utah to develop a repayment plan. Depending on the total debt, the court will agree a time frame for the debt to be repaid per the plan; usually from three to five years.
Not all debt can be disposed of by the declaration of bankruptcy; student loans, child and spousal support and taxes are non-negotiable, either are criminal fines or recent charges against a credit card. Although you will be free from the burden of debt, you will also be faced with rebuilding your credit worthiness, this can easily take up to 10 years. Rebuilding your credit score is one thing, getting credit is another, you will still find that credit is available, but the interest rates will be quite high as you will still be seen as a risk by potential creditors.
