Declaration of bankruptcy comes with the advantage of gaining legal protection for a financial situation that deems you unfit to clear all your debts. Many individuals who face bankruptcy, tend to pull up all their savings to survive the economic crunch. Most financial and legal experts will advise you to avoid this mode of exhausting back up savings. It is much better to apply for bankruptcy than use up lifetime savings to revive a business.
In order to understand the legal procedures involved in application for bankruptcy, you will need to hire the services of a bankruptcy attorney. The main job of the attorney is to determine which type of bankruptcy application would be best for you. As you must know, the most commonly registered cases have been categorized under Chapter 7 or 13 bankruptcy codes. What is the difference between the two Codes? How will your case be dealt with under each Code? Under which chapter should you make your application? Here is a brief idea of the different aspects of the two approaches.
Chapter 7 Bankruptcy
Under this code, the assets of the applicant are evaluated and checked against the debt amount. If the property fit to be liquidated sums up to the debt amount then the property is put up for sale and the money collected from the sale is used to clear the debt. However, not all applications qualify for chapter 7 bankruptcy. Ideally, the applicant needs to clear the Miles Test, an effective tool that helps the court decide which mode of payback would be best. All the applications that are rejected under Chapter 7 code, automatically register under chapter 13 bankruptcy.
Chapter 13 Bankruptcy
If you have exhausted your finances need to clear a loan payment whose deadline is approaching, then chapter 13 bankruptcy is the best option available to you. Chapter 7 bankruptcy concentrates on confiscating and selling all your property to redeem the money required to clear the debt amount. Chapter 13 treatment works by giving you more time to repay your debts. This gives you more time to fight hard financial times, regain the financial status, and then clear the debts. Essentially, your debt clearance period will be extended basing on your possibilities of regaining finances.
When looking for an experienced bankruptcy attorney, Fontana residents must select experienced and accomplished lawyers, who will clearly mark out the options available in their case. Only then can they be assured of adopting the right approach in the application process.