Understanding What Happens When you File Bankruptcy Claims

By: Muna wa Wanjiru

Bankruptcy is sometimes hard to imagine happening to you. When this does occur you have some options that you can take. These are in general chapter 7 and chapter 13 bankruptcy claims. For your creditors to stop contacting you it is essential that you understand what happens when you file bankruptcy claims.

When any person has financial difficulties they have different options that are open to them. To file bankruptcy claims simply means that you are in massive amounts of financial problems and you have no way of paying off all of your debts.

By going through with this legal course of action you are stating that you would like to give the finances that you owe, back to their legal owners. As you have some trouble with paying the original amount you are letting the courts and your lawyer decide the best route to solve this problem.

There are 2 options that are well known. The effects when you file bankruptcy with both of these is that your public record states that you are a bad risk for investment purposes. You should file bankruptcy only when you have understood all that is entailed in bankruptcy.

In the chapter 7 bankruptcy claim you agree to liquidate all of your assets and turn them over to a court appointed bankruptcy trustee. This person will start the process of converting your assets into cash once you file bankruptcy chapter 7.

Once the cash amount has been found the trustee will distribute them amongst your creditors. This step will wipeout your entire debts excepting for certain non-dischargeable debts. You will however need to discuss with your lawyer the various aspects to file bankruptcy for chapter 7.

Instead of looking at the chapter 7 bankruptcy option you can file bankruptcy for chapter 13 instead. With the chapter 13 bankruptcy option you agree to pay your debts during a 5 year period.

The plan that you will follow to implement this payment scheme must be approved by the courts. Once they are sure that you have the necessary financial ability to start your repayment the automatic stay order comes into effect only when you file bankruptcy for chapter 13.

During this period of time your creditors must discuss any financial matters including the handling of re-payment via your lawyer. You will need to make sure that you are discharging your debts according to the plan that was drawn up.

When you file bankruptcy it is because you can't see any option that is open to you. For this reason you should see how your lawyer can help you out of this bind and place you back on a clear financial path.

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