Anyone who has read previous posts here knows that there are many different factors to consider before making the decision to file for bankruptcy. But, after the decision is made to go through with a bankruptcy filing, the next question to answer is which type of bankruptcy filing will apply in your unique situation.
Some people who are earning an income but can't seem to get out from under their burdensome debt load will need to recognize that they may be limited to filing for bankruptcy under Chapter 13. This type of bankruptcy becomes a structured repayment plan that lasts from three to five years.
Most people, however, are interested in Chapter 7 bankruptcy. Under Chapter 7 an individual lists all of their debts and all of their non-exempt assets. From there, the bankruptcy trustee will sell off the non-exempt assets and apply the proceeds to the outstanding debts. Any qualifying debts that are not paid off by the asset sale are then discharged.
When a California resident is able to discharge debt through a Chapter 7 bankruptcy, this action usually occurs just a few months after the original bankruptcy filing. The Chapter 7 bankruptcy process is typically resolved much more quickly than other forms of bankruptcy filings. But, it is important to note that in some cases not all debts can be discharged. And, these days, many Americans have so many different kinds of debt that they may not realize that some are different than others. This is why it is so important to get the best information about what circumstances will apply in your particular case, because it may be quite different from other bankruptcies you have heard about.
Source: United States Courts, "Liquidation Under the Bankruptcy Code," accessed on Oct. 10, 2014