What Is The Difference Between Bankruptcy and Bankruptcy Protection?
The world of bankruptcy representation and protection is a complicated and messy one. There are a lot of moving parts, and the process can be riddled with setbacks. For that reason, it is important to understand what certain terms mean.
At Groce & DeArmon, we strive to help our clients understand key terms and the differences between these terms. Two things that often get confused are bankruptcy and bankruptcy protection, and today, we will take a look at the differences.
What Is Bankruptcy?
In short, bankruptcy is the legal term for whenever a person or business is not able to pay off their debts. When someone files for bankruptcy, they are legally declaring that they cannot pay off their debts and that they are looking for certain protections. Bankruptcy was designed to help debtors erase some of their debt through a variety of different Chapters. When a debtor seeks to declare bankruptcy, they will do so at a federal court, where they will decide which chapter to file.
What Is Bankruptcy Protection?
These different chapters are the forms of bankruptcy protection, each providing different benefits offered to different situations. Essentially, filing for bankruptcy is acknowledging that you cannot pay your debts to the courts and that you need help. Bankruptcy protection is the means by which the court will help the debtors erase that debt.
These protections vary among individual situations and in how the debt is discharged. The two most common forms of bankruptcy protection are Chapter 7 and Chapter 13 bankruptcy. With Chapter 7, debtors liquidate their assets to discharge their debt. With Chapter 13, debtors are put on a repayment plan.
Why Is The Difference Important?
It is important to understand that simply declaring bankruptcy won’t actually afford you very much protection from creditors. To find bankruptcy protection, you will have to file under a certain chapter. So while declaring bankruptcy is an important part of the process, filing for bankruptcy protection is where most of the work is done.
Contact Groce & DeArmon For More Bankruptcy Tips
Bankruptcy protection can help debtors wipe their slate clean through a variety of different chapters, but it is important to understand that declaring bankruptcy is only the beginning. For more information on bankruptcy protection, get in touch with Groce & DeArmon at (417) 862-3706 or contact us online today.