Millions of people have been affected by all of the financial ups and downs of the past few years. There aren’t many households in the United States that haven’s felt the pinch on their finances or had to consider more serious measures, like Personal Bankruptcy. If you’ve considered filing for personal bankruptcy in Mesa, Arizona, you’re not alone. Many everyday people just like you have had to consider filing for personal bankruptcy. It helps to understand a few things about bankruptcy to get through it and come out better on the other side.
What is Personal Bankruptcy?
Bankruptcy is a legal term that describes a person or people that are unable to pay their creditors. This does not indicate any wrong doing on the part of the person declaring bankruptcy. It simply means that for whatever reason or reasons, that person is unable to make adequate, regular payments to creditors for loans, including mortgages, car loans, credit cards, or any other substantial loan. Bankruptcy is meant to protect you if you should ever come to a place where you are unable to pay your creditors.
Types of Personal Bankruptcy
The two most common types of bankruptcy are Chapter 7 and Chapter 13. You might also hear about Chapter 11 Bankruptcy quite frequently. If you live in Mesa Arizona, or any other part of the United States, and hear about a Chapter 11 bankruptcy, you should always know that this kind of filing is always done by a business. You will never hear of an individual filing Chapter 11 for a personal bankruptcy case.
This type of bankruptcy is often referred to as a “liquidation”. That simply means that a Chapter 7 bankruptcy filed in Mesa, Arizona would wipe out all of that resident’s debts. All debts are completely wiped out, but in the process a lot of the person’s personal property, like cars and houses can be sold off as well. A bankruptcy lawyer can help a person to protect some personal property. Chapter 7 is more dramatic than other types of bankruptcy and should not be entered into lightly. Learn more about Chapter 7 bankruptcy.
Chapter 13 Bankruptcy is often called a “reorganization”. This means that the person who files is put on a repayment plan to pay creditors what is owed. Most times all debts are rolled into one payment and interest rates are lowered. Some debts will be completely repaid, other debts may be lowered, and some may be wiped out completely. Chapter 13 makes it easier to hold onto personal property. Learn more about Chapter 13 bankruptcy.
Both types of personal bankruptcy in Mesa, AZ, or any state in the country allow a person some protection from debtors. If you file personal bankruptcy your debtors are not allowed to take any legal or personal action against you. Bankruptcy is put in place to protect people while they get out of financial difficulties and gives them a clean slate once the process is complete.