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You are not alone when filing for bankruptcy. Although this legal process is highly stigmatized it is a tool used by many to get a fresh start on finances. Bankruptcy is used when an individual or business cannot repay their debts to creditors. Filing for bankruptcy is a great legal option available to help alleviate financial struggles by clearing debts, preventing foreclosures, and protecting you from creditor or debt collector harassment.

The Bankruptcy Process

The bankruptcy process can be complex and intimidating. It can also be challenging to navigate the filing process without the guidance of an experienced bankruptcy attorney, as the bankruptcy laws of are always ever-changing.

Understanding the bankruptcy process is half the battle:

  • The first step in the bankruptcy process is to for the debtor to file a petition with the bankruptcy court.
  • Once the petition is filed, creditors are sent a notice from the court that the debtor has filed.
  • Bankruptcy cases can vary, and after creditors are notified some allow a debtor to reorganize and create a plan to repay creditors, while other cases may involve liquidation of the debtor’s property.

Every case is different and there are different kinds of bankruptcy filing options available, depending on your specific financial needs. The options available for filing for bankruptcy include Chapter 7 or Chapter 13 bankruptcy.

Chapter 7, 11, 12 and 13 Bankruptcy

Determining which bankruptcy type fits your individual needs is a vital step in filing for bankruptcy.

Chapter 7 bankruptcy liquidates your assets, essentially wiping out your debt and allowing you to start fresh financially. In this bankruptcy process, your assets are used to pay back creditors. There are some exceptions to the liquidation process, including being able to declare some of your property as exempt.

Chapter 11 bankruptcy is for businesses facing bankruptcy. This bankruptcy case can involve a reorganization of your business’s affairs, debts, and assets to give you and your business a fresh start. This type of bankruptcy case is very complex, and the process helps a company restructure its debts.

Chapter 12 bankruptcy is a process specifically for family farms and fisheries. This type of bankruptcy would allow you, the owner of a farm or fishery, to reorganize your finances and debts without losing the farm or fishery. You will work with a bankruptcy trustee and creditors to create a suitable payment plan while still operating your farm or fishery.

Chapter 13 bankruptcy allows you to keep your assets and establish a repayment plan for your debt according to an agreed amount and timeline with your creditor. The payment plan structure is dependent on your financial situation, but the average timeline is three to five-years. After filing Chapter 13 bankruptcy you can’t file again for a six-year period.

Each financial situation is unique and the path you select will depend on debt relief goals. It is best to work with a bankruptcy attorney that can guide you toward the best financial decisions to meet your needs.

If you believe bankruptcy could be right for your financial situation or have questions about the process of filing bankruptcy in Pennsylvania, West Virginia, and Ohio the attorneys at Ruschell & Associates can help.

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