Bankruptcy is a court proceeding which lets a person or business have some or all of their debts absolved. It should normally only be considered as an option of last resort, because it can have significant long-term consequences, even if it can stave off financial disaster. This means that the costs and benefits need to be carefully considered before filing. Bankruptcy is controlled by federal law and handled in federal courts, so the procedural and substantive rules involved in Montana are often the identical as everywhere else in the U.S. However, individual bankruptcy courts have slightly different rules for items such as exemptions, so it would be a good idea to consult with a local Lewistown, Montana bankruptcy attorney beforehand.
Chapter 7 Bankruptcy in Lewistown, Montana
There are 2 main forms of bankruptcy in Lewistown, Montana. They are known as Chapter 7 and Chapter 13 Bankruptcy. Chapter 7 involves liquidation of part of a debtor's assets. It requires that a certain percentage of the debtor's property to be sold to pay off as much debt as possible. The majority of property that most people own, however, is exempt. This normally includes homes, vehicles, retirement accounts, and others. These are not available to creditors.
Once the non-exempt property is sold, the rest of the dischargeable debt is cleared. Some forms of debt, however, is non-dischargeable, including student loans, criminal fines, and others. If most of your debt in Lewistown, Montana is not dischargeable, Chapter 7 may not be the best option.
Chapter 13 Bankruptcy in Lewistown, Montana
Chapter 13 Bankruptcy in Lewistown, Montana is very different from Chapter 7. Whether or not it is a better option is very dependent on the facts of each particular case. Chapter 13 bankruptcy does not excuse debt, it restructures it. This involves a court coming up with an altered repayment plan designed to be manageable for the debtor. This new plan sets aside the terms of the original contracts that created the debt in the first place. This creates a new payment structure, normally involving a single monthly payment, that the debtor should find manageable.
Which Type of Consumer Bankruptcy Should I File in Lewistown, Montana
Chapter 13 is normally a good option for people who have a stable income, and a large amount of non-exempt property that they can't part with. On the other hand, if most of the debtor's property is exempt, and he or she does not have a stable income, Chapter 7 might be more beneficial.
Of course, you should always seek the counsel of an accomplished local Lewistown, Montana bankruptcy attorney before you make the decision to file. He or she will be able to advise you of your options, and suggest the best possible course of action for your individual situation.