Nowadays filing for bankruptcy has become quite a trend, with people opting for this solution to get out of unmanageable financial situations. Lack of jobs and a difficult economy has created many cases of debt which finally lead to bankruptcy. However, before you do take the final step and file for bankruptcy it is important to know what types of bankruptcy you can file for.
The most common types of bankruptcy are filed under specific chapters. Chapters Seven, Twelve, Thirteen, Nine and Eleven. It is essential you understand these types of bankruptcy in detail if you want to find out what is best for your situation and avoid bad surprises.
Chapters for private businesses and individuals:
Chapters 7 and 13 relate to individuals and private concerns and are the types of bankruptcy you should be filing for if you have your own one-man business or are a private individual.
Chapter 7 helps the debtor sell back his or her non-exempt assets in order to refund creditors. To find out what assets are or are not exempt you will have to look up the federal laws, where you will find a comprehensive list. With Chapter 7 you can receive a discharge from your running debts, which will only be granted if you follow the correct procedure dictated by the bankruptcy codes. Any transgression on your part will automatically have your bankruptcy filing denied by the bankruptcy court. This chapter may completely clear your personal credit card debt and grant you total exemption from money you owe creditors.
With Chapter 13 you are compelled to have a repayment plan in order to refund your creditors. The reductions that creditors give for paying must be included in the plan. You are allowed five years to pay back all your debts.
However, there are still some debts you will have to sustain with Chapter 13 even though your filing goes through smoothly, that you can avoid discharging with Chapter 7 if you file without any discharge. These include:
- Student Loans
- Fines and Penalties
- Taxes
- Property settlements
- Personal injury claims
- Criminal restitution and forfeitures
- Child support and alimony
With Chapter 13 you will have a general restructuring of credit card debts and you will be asked to refund part of the sum you owe. This gives you the advantage of using a home or other major resources to clear your debt record.
Chapter for farming and fishing family businesses:
Anglers in addition to farmers normally report with Chapter 12 as long as their business is actually family owned. They will need to produce a list naming their collectors, assets in addition to liabilities in addition to any paper work concerning of their fiscal affairs. They may refund their debts, which are considerably reduced, within a given time span.
Chapter for commercial businesses:
Chapter 11 concerns all commercial businesses and it also comes under the heading of reorganization of a business concern. This is probably the most difficult chapter to come to terms with and although an individual may file under Chapter 11 it is usually claimed by organizations.
Chapters for towns and cities:
Chapter 9 relates to towns and cities and is used by municipalities with dislocation expenses. These problems may occur due to an inappropriate budgeting plan or misfortune. This Chapter will protect both the creditors and the public. In other terms, if the municipality has bankruptcy problems so do the people living within the municipality. When a municipality is under financial stress then the whole community will suffer the outcome of debt, as well as the constituents and the people running the municipality. The choice of filing for this type of bankruptcy is a matter of responsibility towards the people living in the town.
With Chapter 9 the municipality can refund the debts using a specific repayment plan that is set by the bankruptcy court. This allows the town to stay afloat and get out of trouble without having to cut down on the services provided to its constituents and people living within that municipality.
Once you think you are entirely familiar with the different types of bankruptcy that you may choose from, then you may go on and research the best kind for you together with a community bankruptcy lawyer. Just about any attorney firm will grant you a complimentary phone meeting in order to assess whether they can be of any help for you type of bankruptcy. If you hire a bankruptcy attorney this will help you overcome the stress of the precarious predicament in addition to telling you precisely how you should act and gain the best possible outcome.
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