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davidtrump

Factors 1 & 2 - 14 key factors when considering bankruptcy

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1. There are two main types of personal bankruptcy.
Chapter 7 allows the filer to walk away from debts entirely. This option is used by those whose debts are so high or income so low that after basic expenses they don’t have the money for a payment plan. Chapter 13 allows the filer to draft a plan to repay all or part of the debts over three to five years.

2. Consumers don’t use bankruptcy frivolously.
People turn to bankruptcy when they have major life events that significantly reduce their income, increase their bills or both, says Henry Sommer, past president of the National Association of Consumer Bankruptcy Attorneys. The most common reasons for bankruptcy: divorce, unemployment and medical bills, says Sommer. “In 50 to 60 percent of cases, there are medical problems present,” he says.

Filing bankruptcy also halts, at least temporarily, collection attempts and foreclosures. If you’re unemployed or recently re-employed but facing foreclosure because of missed payments, Chapter 13 can help you save your home, says Sommer. “In fact, it’s one of the most common uses for Chapter 13,” he says.

The reason: If you can afford your mortgage payments on your salary (or expected salary), Chapter 13 allows you to repay missed payments over three to five years. It can also stall a foreclosure long enough for you to get re-employed.

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