Bankruptcy is a big life event that can impact so much more than just your finances. Filing for bankruptcy can follow you for many years and make things trickier when trying to get hired for a job, purchasing a home, or starting your own business. While many people view this is a great way to hit the “restart” button, it is imperative to understand how this status will influence your future. And in fact, just because you file for bankruptcy doesn’t necessarily mean that all of your debts will be eradicated.
To find out whether bankruptcy is right for you and what chapter you qualify for, consider speaking with a bankruptcy lawyer in your city as soon as possible!
How many types of bankruptcy are there?
There are six types of bankruptcy, and include Chapter 7, Chapter 14, Chapter 11, Chapter 12, Chapter 15, and Chapter 9. Each was designed for a particular purpose, and not every person will qualify for every chapter. However, the most commonly used bankruptcy chapters are Chapter 7 and Chapter 13. Here we have briefly listed each one:
- Chapter 7: Liquidation
- Chapter 11: Large Reorganization
- Chapter 13: Repayment Plan
- Chapter 12: Family Farmers and Fisherman
- Chapter 9: Municipalities
- Chapter 15: Foreign Cases
Is it possible to keep my property and file for bankruptcy?
Yes, if you prefer to keep your property, then filing for Chapter 13 bankruptcy may be most suitable for you. Under this chapter, you can keep your belongings but will have to follow a 3-5 year repayment plan towards paying off your debts. There is a chance that after this duration of time, any left over debts will be discharged. By comparison, under Chapter 7 an individual would sell off their property, and then that money would be sent to creditors as payment.
Is there a bankruptcy chapter designed for big businesses?
Chapter 11 in particular is often used to help a business or corporation reorganize their finances. The business owner will be required to create a play for how they will keep operating the company, while still paying off a portion of their debts. The bankruptcy court and creditors must approve the plan.
How does Chapter 12 help family farmers and fisherman?
The field of family farming and fishing in itself is vastly different than other careers, which is why a bankruptcy chapter was established just for them. Chapter 12 bankruptcy enables fisherman and family farmers to avoid selling their property or foreclosing, in exchange for following a repayment plan. It is similar in essence to Chapter 13, but offers more flexibility and higher debt limits.
Making the choice to file for bankruptcy is not an easy one, but it can be a useful resource for people who qualify. To find out if bankruptcy could alleviate the pressure of debts and set you on a new path to financial stability, then consider speaking with a lawyer.