The US Constitution guarantees your right to dismiss some or all your debts in case you cannot pay for them anymore. As an individual, you can file for bankruptcy under chapter 7 or 13 of the Bankruptcy Code.
Under chapter 7, you can discharge part or all your debt, according to Utah Bankruptcy Pros. You can also file for chapter 13 bankruptcy in Sandy, Utah if you can repay some of all your debt according to an agreed payment plan.
Chapter 7 Bankruptcy
Chapter 7 covers traditional bankruptcy. It involves the discharge of your debts. To pay for your secured debts, you may pay or surrender your non-exempt assets. Any non-exempt property will be used to cover as much debt as possible. You get to keep all exempt property. You are also free from any obligation to pay your remaining dischargeable debts.
One important condition to qualify for Chapter 7 is you must have no adequate income to pay even part of your debt. If you have enough income, Chapter 13 will apply, and not Chapter 7.
Chapter 13 Bankruptcy
Under Chapter 13, you cannot expect to discharge all your debts. You can do any of the following:
1. Get rid of some of your debts to allow you to manage your payments better;
2. Restructure your debts and considering your income to make them easier to manage;
3. Your payments will be made over an extended period. You could also pay only some of your debts. Either way, your regular payments will be lower. A trustee will oversee your finances the entire time, which often lasts for five years.
When considering your payment plan, the judge and the trustee will make sure that creditors receive fair treatment. As long as the judge sees the plan as fair, he will approve it even if the creditors object.
Understand the different bankruptcy options for individuals. This way, you will know what option is better suited to your particular situation.