Bankruptcy can be a difficult thing to maneuver through. There are many different types of bankruptcy as well which can make the process even more difficult. Choosing which bankruptcy to file for is important as different chapters of bankruptcy are set up for different types of situations. Some types may require assets to be sold off while others establish a short-term or long-term re-payment plan. This article will take a look at the different chapters of bankruptcy and who they are for.
Chapter 7: The Most Common
Chapter 7 is generally known as the most common bankruptcy that people file for. This type of bankruptcy is also known as the liquidation bankruptcy. A court will appoint a person to watch over the liquidation process to ensure that assets of worth are sold to pay off debts to creditors. Property like houses and cars are typically outside of the assets deemed to require a sale to pay off debts, but this may vary depending upon what state someone lives in.
Chapter 11 Bankruptcy
This type of bankruptcy is reserved for high-income earners or businesses. A business will find a way to still stay in business while paying off their debts in a chapter 11 bankruptcy. Someone who operates real estate or other businesses with assets worth high value are the ones this type of bankruptcy is generally used by.
Chapter 13 Bankruptcy
This bankruptcy type sets people up to pay off their debts on a monthly payment plan. Typically, the time period of these plans is between 3 and 5 years to pay off. Amounts will be determined based on income earned and compared to debts owed.
Other Chapters of Bankruptcy
There are other chapters of bankruptcy too like chapter 12 and chapter 15. Chapter 12 is reserved for family farmers and family fishermen and works similarly to chapter 11 in that farmers or fishermen will work to pay off their debts over a 3 to 5 year period. Chapter 15 bankruptcy is designated for dealing with foreign creditors and works to establish ties with the United States and other countries that the debtor has ties to. Dealing with bankruptcy can be a difficult thing. That is why it is advised to seek the services of an experienced and skilled bankruptcy lawyer such as CT Bankruptcy Attorneys to help you out with whatever type of bankruptcy that you need to file for.