Many people across North America have financial troubles at one time or another in some form. And the decision that most of them may have come across is that of filing for bankruptcy. Now what does filing for bankruptcy actually mean? Filing for bankruptcy basically means that your debt slate is wiped clean and you start from scratch. The bank allows this to happen when you're in way over your head and cannot escape debt on your lonesome. For those who are entering the decision to declare bankruptcy, there are still two options available to them.
There are two primary plans when filing for bankruptcy, and they are Chapter 7, and Chapter 13. Chapter 13 runs along the lines that if you have a regular income, and a rather limited debt, then the bank will allow you to keep a mortgaged house, or owned vehicle, which you may have otherwise lost in the same situation. What happens is, the court will rule a payment plan for you, (which it is wise to strictly obey), that will allow you to pay off your debt within 3 - 5 years or so, rather than losing any property.
On the other hand, there is Chapter 7, otherwise known as "straight bankruptcy", which involves the liquidation of all your assets which are not exempt. If you have exempt property, it may include cars, work related tools, and home furnishings. Some of your property may be sold by a court appointed official, trustee, or simply turned over to creditors. You can receive a discharge on your debt through way of Chapter 7 only once every six years. Althought it may seem a harsh form of debt payment, filing for bankruptcy may be the only way that you are able to pay off your debt, outrageous or not.