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When people are no longer able to pay their debts, they can seek legal protection in the form of declaring bankruptcy. Since the 2008 recession, Americans have been filing for bankruptcy in record numbers. In fact, over 1.5 million Americans have sought help from the government in paying off their debts. Here are a few important things people need to know about bankruptcy.
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- There are two kinds of bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Generally, it is believed that a Chapter 13 bankruptcy makes it easier for the filer to retain valuable assets like a home or a car, although it is very subjective to the given situation.
- Chapter 7 bankruptcy involves liquidation of assets to pay off debts. Chapter 13 bankruptcy requires a repayment plan wherein the filer receives money to pay off his or her debt.
- A lot of debts are often written off after a year from filing bankruptcy.
- Public officials may deal with the companies or people the filer owes money to after bankruptcy has been filed.
- As for the minimum amount of debt before filing bankruptcy, there is none. Although if the debt is not that huge, other ways of paying it are recommended by consultants.
- Every state has options for bankruptcy filers to keep some of the things they own, to help them “start anew”.