Types of Bankruptcy
What is the Difference?
Chapter 7 Bankruptcy
Generally, a Chapter 7 bankruptcy is a liquidation bankruptcy or a legal way to wipe out your debts and start fresh. You will be able to wipe out most of your unsecured debts, such as credit cards, personal loans, repossessions, medical bills, etc. Most people who file Chapter 7 bankruptcy are able to keep their homes and cars as long as they are current on their payments. However, there are income limitations on who may be able to file a Chapter 7 bankruptcy. Continue reading to learn more about Chapter 7 bankruptcy.
Chapter 13 Bankruptcy
Generally, a Chapter 13 bankruptcy is a reorganization plan bankruptcy, or a legal way to pay back a portion or all of the debts that you owe. In Chapter 13 bankruptcy, you are usually able to keep your house and/or car. The most common reason for filing a Chapter 13 bankruptcy is to allow you to catch up on your house and/or car payments and stop a foreclosure or repossession. In a Chapter 13 bankruptcy, your secured debts including what you are behind on your house, your mortgage payment(s) and what is owed on your car, and a portion of your unsecured debts including credit cards and medical bills will be repaid over a 3 to 5 year time period. Continue reading to learn more about Chapter 13 bankruptcy.
Other Types of Bankruptcy
Two less common types of bankruptcy are Chapter 11 and Chapter 12. Chapter 11 bankruptcy is usually for corporations. However, if the corporation has limited or no assets, or the business is a sole proprietorship, it is often best to file a Chapter 7 or Chapter 13 bankruptcy. You should speak to an attorney for more information regarding which of these bankruptcies is best for your business. Chapter 12 bankruptcy is generally for family farmers or family fishermen. There are limitations on both of these bankruptcies based on federal and state laws. In many ways, both of these types of bankruptcies are similar to Chapter 13 bankruptcy for individuals.
