One of the most frustrating issues a creditor faces is when a customer stops paying their bills and their past due balance begins to accumulate despite the creditor’s attempts at collecting. That frustration can rise even more if the customer files for bankruptcy. When a person files for bankruptcy, the courts issue an injunction, referred to as an automatic stay, that halts all debt collection activity. Creditors who face this situation should speak to a Chicago debt collection attorney to find out what rights they have when it comes to collecting what the customer owes them.
Bankruptcy Options
When an individual files for personal bankruptcy, they usually have two options, Chapter 7 or Chapter 13. A Chapter 7 bankruptcy is often recommended for people who do not own a home since it involves selling off any property the person has in order to pay off debts, although there are some exemptions to what type of property can be sold. It is often referred to as liquidation bankruptcy.
Chapter 13 bankruptcy provides bankruptcy filers the opportunity to restructure their debt, allowing them to keep their home and other property. It is usually the choice for people who have secured assets (home, vehicles, etc.). The court approves a repayment plan that allows the person to repay their debt over a period of three to five years. Once the repayment period is complete, any remaining debt is charged off.
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