Some think that it is a “cure all” for a person’s financial problems. Others believe that it is an escapist’s method of avoiding the payment of bills. In reality, bankruptcy is a complex process with several different types, depending on your circumstances and whether you personally are declaring bankruptcy or if it is for a business.
Chapter 7 Bankruptcy
This type of bankruptcy filing has the harshest impact, and is usually what people think of when they think of bankruptcy. It is used for those who have a large amount of debt that has to be paid off. Basically, everything that a person owns is sold off to cover their bills, including their house and vehicles. The debtors have to accept what money that they receive from the sale and be satisfied with that. The only items that are left out of the equation are small personal items, such as family photos and clothing.
Chapter 11 Bankruptcy
Only business owners can file for this form of bankruptcy. Many businesses prefer this type because it allows them to continue operating their business throughout the legal process of paying off their debt. While some business assets may be sold to pay some of the debt, the personal property of the owner is not considered here. However, the court will demand a strict repayment plan that has to be closely adhered to.
Chapter 12 Bankruptcy
Since farmers have specific financial needs, this type of bankruptcy was created for them. It allows them to pay off their debts without losing their farm, farm equipment, home, or vehicles. They have to be able to make the payments that are set up for them though, which isn’t always easy during harsh growing seasons.
Chapter 13 Bankruptcy
For those who have a steady job, Chapter 13 bankruptcy offers some relief without requiring your to sell all of your assets. It can be difficult to qualify for this type because you have to prove that your income is steady and will allow you to meet your payment schedule. If you are filing for Chapter 13 bankruptcy, it is important to have legal help so you can prepare your case in order to convince the court properly.
Each type of bankruptcy functions differently and the type of bankruptcy you choose to file for will depend on your personal circumstances and your financial situation. Before filing for bankruptcy, you should talk to a financial advisor and a lawyer with experience in handling bankruptcy cases. They will be able to help you create a plan to recover from your debt in the best way possible.
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Last update on 2020-03-19 / Affiliate links / Images from Amazon Product Advertising API
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