Deciding to declare bankruptcy is a difficult decision. If you are overwhelmed by large hospital bills, credit card debt or other bills, it may be time for you to declare bankruptcy. In bankruptcy, you are relieved of many of your debts.

Bankruptcy proceedings take place in federal court. A bankruptcy stays on your credit report for 10 years and makes it difficult to get credit in that time span.

It is wise to retain the services of a lawyer in Cincinnati when considering bankruptcy. An attorney will provide you with the information you need to make a decision regarding bankruptcy, file the proper paperwork and represent you in bankruptcy court, if necessary.

For someone who is filing bankruptcy, the two most popular types of bankruptcy are Chapter 7 and Chapter 13. While both are forms of bankruptcy, there are huge differences between the two. Understanding the differences is pivotal before proceeding with the filing process.

In a Chapter 7 bankruptcy, the person who is filing bankruptcy sometimes isn’t required to repay unsecured creditors. However, the bankruptcy court can demand that all non-exempt assets be liquidated to repay the unsecured creditors. For this reason, Chapter 7 bankruptcy is occasionally known as liquidation bankruptcy.

The exempt assets in a Chapter 7 bankruptcy can consist of everything from a home to insurance policies. However, rules and regulations regarding exempt and non-exempt items in a Chapter 7 bankruptcy can differ from state to state. Some states offer no home protection, while others exempt virtually the entire equity of a home.

Once the nonexempt items are liquidated, the proceeds taken from the liquidation are dispersed to the unsecured creditors. After that has occurred, filers of a Chapter 7 bankruptcy will have no further obligation in regards to those unsecured creditors.

Chapter 13 bankruptcy has a completely different twist on the same basic concept. In a Chapter 13 bankruptcy, the courts determine the value of the filer’s non-exempt assets. However, instead of going through with the liquidation, the filer is required to repay the unsecured creditors at least the amount of the value of the non-exempt assets.

The exact amount is determined by the bankruptcy court, but usually the minimum is the value of the filer’s non-exempt assets. The unsecured creditors are repaid through the court system instead of directly from the filer of a Chapter 13 bankruptcy. The courts grant a specific time limit for the repayment, usually between 36 and 72 months.

If you are deciding between Chapter 7 bankruptcy and Chapter 13 bankruptcy, it’s important to comprehend the differences. The main difference is that Chapter 13 bankruptcy demands some sort of repayment plan, while Chapter 7 bankruptcy instead liquidates your non-exempt assets. For more information regard bankruptcy laws and for specific help, contact a local Cincinnati bankruptcy attorney.