Bankruptcy is more common than you might think. Most people face financial difficulties in their life, but the number of bankruptcies that are filed might surprise you. Hundreds of thousands of people file for bankruptcy every year, and states like Michigan accounted for 56,000 of them in 2011 alone. Filing for bankruptcy is not an easy process, and it deals with many legalities that require you to know when to file bankruptcy, the type of filing that is necessary, and specific ways to repay creditors. Luckily, the system of paying off creditors has changed in favor of the debtor. Ancient Roman laws that were in effect around 450 BC, allowed creditors sell a debtor off to slavery or kill him. Fortunately, none of the ways to pay back a creditor today involve such high stakes.
One of the most common filings to repay a creditor is a Chapter 13 bankruptcy. In fact, 16 percent of Michigan’s 56,000 bankruptcies in 2011 were Chapter 13 filings. In this filing, you can keep your property, but you have to pay back your debtors within a three to five year timeframe. It is also common to use your income to pay off part of all your debt, and your ability to do this must be proven to the court. A low income or one that is unsteady might result in a rejection of your case to file a Chapter 13 bankruptcy. In another common filing, Chapter 7, all your debts can be canceled, but you might lose our home in order to pay back debtors. This is not the most favorable kind of bankruptcy, but it is frequently used by people who do not have sufficient income to pay back a creditor on their own.
Even though the nationwide bankruptcy filings dropped by about 182,000 from 2010 to 2011, these numbers do not indicate that the economy is improving. Instead, many people are realizing that, contrary to popular belief, bankruptcy is not a cure-all solution to money problems. Many bankruptcy filings, like Chapter 13 or Chapter 7 bankruptcy, put the onus on a homeowner to pay back their creditors within a reasonable time frame. The court also often requires credit counseling for debtors to help them regain control of their finances, and prevent future issues. If you are facing financial difficulties and you are not sure when to file bankruptcy, consult a bankruptcy attorney as soon as possible. They will be able to help you figure out if you need to file, when to file bankruptcy, and determine which chapter filing would be best for your situation. This can make the entire process less difficult than it already is. Find more on this here.