Different Chapters of Bankruptcy & the application
Since the turn of the century there has been new establishment of bankruptcy laws. These different types offer several ways in how the bankruptcy will work for them, setting up repayment and who can file the type of bankruptcy. Not every type of bankruptcy is ideal for every debtor and it is of utmost importance that you find the right type of bankruptcy when filing, so you can benefit the most out of the process.
I will show the 3 common chapters:
Chapter 7 bankruptcy can be filed by individuals or businesses. This type of bankruptcy wipes the debts clean with little or no repayment.
Anyone filed under this bankruptcy will find that he can have some possessions exempted from selling and everything not exempted is sold to pay debts.
Once the bankruptcy is approved the persons debts filed under the bankruptcy are cleared.
Chapter 11 bankruptcy is similar to Chapter 7 as it can be filed by both business and individuals. It is usually reserved for businesses, though.
This type of bankruptcy is best for those with a lot of assets and a lot of debt. It is a repayment plan that allows a person or business to repay debts in a way they can afford while also keeping all their assets.
Under this chapter, businesses can still remain run as per normal, which is a very good option for many.
Chapter 13 is another repayment plan for individuals only. Under this chapter a person get to keep their possessions while repaying their debts and avoiding common collection methods.
Any type of bankruptcy protect a person or business from the creditors. Once bankruptcy is filed creditors must stop all collection processes. They can not file court charges or claims. They can not continue to send letters or call a debtor. They can not do anything outside of the bankruptcy proceedings.
The choice of what type of bankruptcy to file is really based upon your own financial status. Always look at your assets and debts carefully before you decide. Ultimately you should be look at clearing your debts without losing all your current assets. In order to best do this you need to look at what property you own that is exempt and if you have any property that is not exempt.
Bankruptcy should not be seen as a way to get out of debt. It should be seen as a way to help you to get back on track. Do not think that you can get away with Chapter 7 because the debtor can keep some of their properties. The revised laws have imposed rulings that stops many debtors from filing Chapter 7 because they can afford to pay debts.
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