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Two forms of bankruptcy designed to give people a fresh start

People who find themselves in financial debt can get a fresh start by filing for bankruptcy. There are two types of bankruptcy which individuals can file for in hopes of either getting their debts erased or consolidated.

Chapter 13 Bankruptcy 
This type of claim is designed to help people with large debts pay them off by consolidating their bills. The person filing the claim, who is also known as the petitioner, will have their debts weighed against the amount of money they earn every month to see if a consolidation would be the best method to use. The main advantage to Chapter 13 bankruptcy is the ability to save your credit rating. Even if the rating is currently low, the ability to continue making payments to creditors will prevent the rating from falling into the bad risk category.

Bankruptcy laws usually vary somewhat from one state to another. In some cases, people looking to file for Chapter 13, might be required by the courts to undergo credit counseling. In this case, they would need to provide the courts with proof of having gone through the counseling process. Other items which will need to be filed as proof will include the petitioner’s current source of income as well as their last tax return. It is not necessary to bring all of the bills from creditors into the courtroom. All of the current amounts owed should be clearly listed on the legal forms used for the bankruptcy case.

Chapter 7 Bankruptcy 
This type of bankruptcy case is used in situations of extreme hardship. When approved by the courts, the debtor will have all of their current debts erased. While it can be almost impossible to get rid of debts which are student loans, more courts are allowing these to be wiped clean if the person is in extreme hardship and the proper forms are filed with the case. Like Chapter 11, the petitioner will be required to complete a form listing all of their current debts as well as any income they are currently receiving. When completing the list, petitioners will also be able to include their monthly living expenses as part of what they need to pay every month.

Chapter 7 is a good way for people facing financial hardship to get a fresh start by erasing all of the debts they currently owe. A few exceptions to this erasure would include the person’s home or car, if they had loans on them and wanted to keep them. In order to retain a home or car, you need to keep making payments to the creditor.

Representation and Fees 
People can choose to represent themselves in a bankruptcy case. The forms are usually available through government offices or online. The fees associated with filing can often be waived for people in financial hardship by filing a fee waiver form with the court. There are many legal services available to help people who want to represent themselves in court. These services usually charge a flat fee for their assistance.

Tom Clark is a freelance writer, professional blogger and social media enthusiast. His blog  focuses on Internet service providers and networking.

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