Bankruptcy as a topic is complex and not very easy to understand. Numerous people do are not aware of what to expect and when to consider it as way of getting over their debts. For the residents of Fort Lauderdale bankruptcy should be considered after deliberating carefully and getting advised by attorneys who are competent. It is also important to determine the best form of protection after considering the situation one is in.

Debtors use bankruptcy as way of getting out of debts that they are unable to pay. Chapter 7 and chapter 13 bankruptcies are the two most common forms of protection that are available to individuals. Chapter 7 is a liquidation plan because it involves liquidating non-exempt assets to raise funds. It is these funds that are used for paying off creditors. Chapter 7 is used to discharge such unsecured debts as credit cards, medical bills and personal loans.

There are types of debts that cannot be discharged by chapter 7 insolvency. These include federal or state taxes and student loans. On filing the petition, the creditors are informed and one enters an automatic stay period. This is a period during which creditors stop any action such as foreclosure or shut off of utility services. However, unless creditors are paid, they will eventually resume action against the debtor when this period ends.

Exempt assets include the primary residence of an individual and their primary vehicle. Every other thing, including investments, real estate and other property, are classified under non-exempt assets. These are sold to pay off creditors. Debtors get absolutely nothing from the sales.

The income of debtors is used as the biggest consideration in determining qualification for chapter 7 protection. In the event that the income is more than the state median, feasibility of chapter 7 is determined by using a means test. As a requirement also, the individual must have undergone credit counseling in the last six months preceding their application. The counseling should be done by an agency that is approved.

Chapter 13 protection is called a wage earners protection. This is because it is meant for people who have regular income and are thus are able work out payment plans with creditors. It works through restructuring of debts. Contrary to what happens in chapter 7, there is no foreclosure or repossession of vehicles. The payments are usually done within five years.

The fact that there is no repossession of property aside, chapter 13 also acts as a form of debt consolidation during repayment. The debtor only needs to make a single monthly payment to their bankruptcy trustee, who pays off creditors as stipulated in the agreement. This makes this type of protection manageable. Filing for bankruptcy involves some charges. One also has to pay their attorney. Thus at the end of the day, there are significant fees involved.

For people that live in Fort Lauderdale bankruptcy filing needs very careful consideration before the decision is reached. It will most likely have a negative effect on the credit of the person. For the majority of people though, it is a good way to start afresh after getting into debt. Other options are debt consolidation and credit counseling.

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