If you are an individual you have 2 types of bankruptcy to consider: Chapter 7 and chapter 13. Chapter 7 basically eliminates all your debts where as chapter 13 will allow you to pay off your debts over a 5 year period of time, supervised by your local court or a trustee. If you are a business you can file under chapter 11 where you will be able to re…
If you are an individual you have 2 types of bankruptcy to consider: Chapter 7 and chapter 13. Chapter 7 basically eliminates all your debts where as chapter 13 will allow you to pay off your debts over a 5 year period of time, supervised by your local court or a trustee. If you are a business you can file under chapter 11 where you will be able to re organize your debts until you manage to pay them off or you will be able to renegotiate in such a way that you can remain in business while you are getting your financial situation back in order.
A quick consultation with your bankruptcy attorney should make it possible for you to find out which of the types of bankruptcy you qualifies to file for. There are a series of tests administered to find out if you qualify to file under Chapter 7 with the new bankruptcy laws. Basically, an income calculation will take place to find out if you have a current monthly income, after taking into account allowable expenses if your income is less than the average in your state you may have the chance to file under chapter 7. If your income is higher than the average thou, you will have no choice but to file under Chapter 13 bankruptcy.
When filing under Chapter 7 bankruptcy, all debts, Inc. those secured and unsecured can be totally eliminated. But, some of the assets you owned could be confiscated and sold off by the court so as to pay off some of your secured debt. As you can see, of the 2 types of bankruptcy, Chapter 7 is the most beneficial if you want to be debt free and start again.
Chapter 13: Paying your debt off over time
If you don’t qualify for Chapter 7 bankruptcy, you might want to take into consideration a Chapter 13 bankruptcy, which will require you to make monthly payment to your court trustee who will then take the money and send off payments to all your creditors listed as part of the repayment plan. Of the 2 different types of bankruptcy available to individuals this helps you meet your financial obligations while at the same time maintaining your creditor’s at bay and stopping them from taking any collective actions against you.
Some years ago, a lot of people would often start out in a Chapter 13 bankruptcy and then find they were simple unable to meet the monthly obligations and so moved over to a Chapter 7 bankruptcy. However following the new bankruptcy laws, which came into effect during 2005, the choice between the 2 different types of bankruptcy as mentioned earlier is now decided by the courts so called “means test”. Simple put, if they find you have the means, current income level, to be able to pay off your debts, you will be restricted to filing under Chapter 13 whether you like it or not.
With either of the different types of bankruptcy, any assets or initial payments will be sent to first to those creditors that, have what is considered by the government, priority access for instance past due income taxes, student loans and additional government obligations. The Payments to your unsecured creditors will be made last in line for recovering money owed.
To find out more about the different types of bankruptcy and to verify with one you could apply for you should consult with a bankruptcy attorney. Remember thou that any bankruptcy you file under will show up on your credit for all to see for up to 10 years, so filing under any type of bankruptcy really should be your very last option.
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