Many recent fiscal indicators have pointed to a more robust economy, such as lower unemployment rates for Connecticut residents and others around the nation. Many households are in a more favorable financial position than they were a year ago. However, there are still those who are struggling just to make ends meet. Some of these consumers may decide that filing for bankruptcy could be the most viable solution to ease their financial burdens. When the decision is reached to file for bankruptcy, an individual has to then determine whether to file for a Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 bankruptcy is also known as a liquidation bankruptcy. A person’s non-exempt assets are liquidated, or sold, to pay his or her debts. In many instances, property, such as homes or vehicles, is exempt from liquidation. While this type of bankruptcy lasts only several months, the information regarding it stays on credit reports for up to 10 years.
Experts refer to Chapter 13 bankruptcy as a reorganization bankruptcy. With this type, a plan is established to repay a consumer’s debts over a three- to five-year period. A trustee receives monthly payments and then, in turn, pays the creditors. The bankruptcy is discharged once the repayment plan has been fulfilled.
Filing for Chapter 7 or Chapter 13 bankruptcy is a major decision. It would be prudent to speak with a Connecticut bankruptcy attorney for advice on how to proceed. A knowledgeable lawyer will help individuals evaluate their options and establish a plan best suited to meet their needs. It is important to work with a trusted team whose goal is to get clients back on the right financial track.