Many individuals find themselves dealing with unforeseen circumstances such as long-term illnesses, being laid off from their employer or personal tragedies like divorce or loss of a spouse. Sudden tragedies can cause the financial status of a family to spiral out of control quickly and send the family into crushing debt almost overnight. In order to regain control and help take some of the pressure off caused by late payments and creditors that won’t let up on you, many consumers have had to consider filing bankruptcy to get some breathing room via the legal system. There are two types of bankruptcy filing that can be done by an individual through bankruptcy court system to give you a fresh start. Chapter 7 bankruptcy chapter 13 were put in place by the law to provide a second chance to debtors to allow them to repay the creditors or wipe out the creditors, as well as financial protection for consumers who are trying to rebuild their crumbling finances. Chapter 7 bankruptcy, otherwise known as liquidation of assets, was set up in order to repay creditors while imposing an automatic stay on collections while the trustee can evaluate the person’s finances. Depending on each situation, this will allow creditors to receive at least some of what is owed to them while protecting the consumer from the creditor from pursuing legal action against them. This of course only works if the consumer has any unprotected property they can be sold by the trustee. If there is no property to be sold, the consumer will have all their debts wiped out and be virtually debt free at the time of the discharge.
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