Hard financial times can fall upon just about anyone in West Virginia. A job loss due to a serious illness or a downturn in the economy can easily lead to financial catastrophe, especially when your savings account and unemployment benefits run dry. In such situations, filing for bankruptcy can be a good way to deal with unmanageable debt and move forward on fresh financial footing. There are two types of personal bankruptcy a person can pursue: Chapter 7 bankruptcy and Chapter 13 bankruptcy.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is also referred to as liquidation bankruptcy. A person’s assets will be sold through court proceedings and the proceeds from the sale will be used to pay back the debtor’s creditors based on the creditor’s priority. After that, most of a debtor’s remaining debts will be discharged. It is important to keep in mind that some debts, such as tax debt, child support and student loans are generally not dischargeable through Chapter 7 bankruptcy. In addition, there are many bankruptcy exemptions that may allow a person to keep certain assets from being sold, such as their home or automobile, so a person will not lose everything if they file for Chapter 7 bankruptcy.
Chapter 13 bankruptcy
Chapter 13 bankruptcy is also referred to as a wage earners plan. Under this form of bankruptcy, a person will enter into a three- to five-year court ordered repayment plan. They will make regular payments to a bankruptcy trustee, who will then use these payments to pay back the debtor’s creditors based on the creditor’s priorities. Upon completion of the plan, most of a debtor’s remaining debts will be discharged. Like Chapter 7 bankruptcy, Chapter 13 bankruptcy cannot discharge certain debts, such as tax debt, child support and student loans.
Learn more about filing for bankruptcy
Filing for bankruptcy can be a responsible way to deal with overwhelming debt. Ultimately, this post is for educational purposes only and does not contain legal advice. Our firm’s website on bankruptcy may be a useful resource to those who want to learn more about this topic.