Exploring The Types Of Bankruptcy
You will find several types of bankruptcy available if you are forced into this situation. Unfortunately, more and more individuals are being forced to file for bankruptcy due to a troubled economy. For every different type of person and situation, you will find a different kinds of bankruptcy to file under. Although this process might seem complicated in the beginning, you will find that your situation will determine your options. Depending on your situation, you will be forced to file under one of several possible Chapters.
As you begin to explore your options you will find a total of four separate kinds of bankruptcy under which you may or may not qualify. Whether you qualify or not will be relevant to your personal debt. You must make an intelligent decision as to what path is the appropriate one for you to take.
These various types of bankruptcy are called “Chapters.” The first Chapter we will discuss is known as Chapter 7. This has come to be known as liquidation bankruptcy. This means that many assets will be ordered to be sold. This is required to pay off as much of the debt as possible. Although primarily for individuals, corporations may also be eligible. Chapter 7 is extremely common.
The next type is usually associated with businesses. This is known as Chapter 11. Some people may qualify for this, but is usually reserved for businesses. In this case the assets of the debtor are not liquidated. Also, their functioning businesses are to be maintained in their typical, working order. But, a plan is put into place that will allow the business to pay off their debt, as to eliminate what they owe.
The third type of bankruptcy is Chapter 12. With Chapter 12, a very specific type of bankruptcy, only farmers are eligible. They will keep their farms and assets. As mentioned above, a plan is put into place to ensure that the debt is paid accordingly.
The final method of bankruptcy is Chapter 13. Chapter 13 is somewhat akin to Chapter 11. But with this type, the focus is on the individuals. The debtor is allowed to retain assets. A plan to pay the debt is discussed, and usually entails a plan ranging anywhere from three years to five years. Although there is a possibility that much of this debt can be discharged, only the individual situation will determined whether this is a possibility.
The idea of filing for bankruptcy is frightening and should only be considered as a last resort. Although there seems to be many choices to be made, the situation will most likely determine the appropriate course of action. Of course, it is advisable that you seek assistance in the form of a qualified and knowledgeable attorney. The attorneys’ fee will vary, but should be strongly considered. Mistakes during this process can prove very costly. If you find that bankruptcy is your best option, consider your actions carefully and take the appropriate steps to ensure financial freedom.
Enrique Castillano also writes about Bankruptcy and Credit issues including File Personal Bankruptcy and Do it Yourself Bankruptcy
