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Intricacies of bankruptcy law
Unfortunately, with the current economic state, bankruptcy is a reality for far too many Connecticut residents. Of course, bankruptcy is not an appropriate solution for all people facing financial hardships. Given the ramifications associated with filing for bankruptcy, it is important that individuals thoroughly assess the entirety of their financial situation before deciding what will be the best for their financial future.
Generally, bankruptcy is an appropriate remedy for people who are having property repossessed, are facing pending lawsuits, are having their wages garnished or are having their bank accounts levied. Before filing bankruptcy, everyone should understand the process and be familiar with its consequences.
Chapter 7 bankruptcy
There are two types of bankruptcies commonly filed by individuals in the United States. The first is Chapter 7 bankruptcy, also known as liquidation bankruptcy. Most people who file for Chapter 7 bankruptcy are able to have most types of their debt entirely discharged. Unfortunately, some types of debt are harder, if not impossible, to eliminate such as student loans, tax debt and debts that are secured by a specific piece of property.
When an individual files for Chapter 7, the court appoints a trustee who will be responsible for protecting the interests of creditors. One disadvantage of filing Chapter 7 bankruptcy is that in some cases individuals could lose some of their property if it can be liquidated to pay creditors. However, most people are able to keep their property by claiming it as “exempt.” In determining exemptions, Connecticut law provides a choice of state or federal bankruptcy exemptions laws. Bankruptcy exemptions can be used to protect wages, Social Security benefits, civil service benefits and veteran’s benefits, and other assets including, up to limited values, cash in the bank and equity in a car or home. Maximizing the debtor’s claim of exemptions is an important service for which the debtor should consult a Connecticut bankruptcy attorney.
Although Chapter 7 bankruptcy is known as liquidation bankruptcy, the assistance of an experienced attorney can help ensure that debtors remain in possession their assets.
Chapter 13 bankruptcy
Chapter 13 bankruptcy is substantially different than Chapter 7 bankruptcy. Chapter 13 is appropriate for individuals who feel as though they are overcome by debt, but believe that such debts can be repaid within some reasonable period of time. Under this form of bankruptcy, debtors will file a repayment plan with the court. Such a plan depicts what percentage of their future income they will agree to pay their creditors. If the court approves the plan, the individuals will be able to make payments for a period of three to five years, and after this period most types of remaining debt are discharged. A very important application of Chapter 13 is stopping foreclosures, repossessions, and seizures. Chapter 13 can allow the debtor to catch up on car and home loans, for instance, or pay taxes, over an extended period of time.
Ensuring a financially secure future
In order to ensure a secure future in the event of bankruptcy, individuals must examine the entirety of their financial situations, in addition to understanding the complex nature of bankruptcy law. Often, this is too much for one individual to grasp. In fact, given the complexities involved with the process, it is highly recommended that an individual hire an attorney.
The bankruptcy process is not only time consuming but is also quite intricate. If you or your family members are considering filing for bankruptcy, you should contact an experienced bankruptcy attorney. The attorney will be an invaluable tool in helping you take the steps necessary to ensure a financially secure future.