This blog recently discussed the liquidation bankruptcy process and the protections it provides. There are multiple personal bankruptcy protection options for struggling consumers to consider so they should understand the different options available to them.
There are generally two different types of personal bankruptcy protection including Chapter 7 liquidation bankruptcy and Chapter 13 reorganization bankruptcy. There are different requirements to qualify for each type of bankruptcy that those considering filing for bankruptcy protection should be aware of. For those who qualify, Chapter 13 provides a bankruptcy option that allows the filing party to reorganize their debt so they can repay it over a manageable period of time and enjoy debt relief.
After the filing party has filed for Chapter 13 bankruptcy protection, the automatic stay will go into effect to protect them from creditors during the bankruptcy process. Then, with the help of the bankruptcy court, a repayment plan will be developed that also has to be approved by the bankruptcy court. The repayment plan usually allows the filing party to repay their debts over a 3 to 5-year time period. Provided the filing party adheres to the repayment plan, they can receive a debt discharge at the end of the process.
Both types of personal bankruptcy protection provide different benefits and protections which is why those struggling with overwhelming debt should be familiar with the differences so they can determine which is the best option for them. Bankruptcy relief can help eliminate some of the day-to-day stress debt creates which is why consumers facing financial challenges should understand how these protections can work for them.