Different Chapters of Bankruptcy & which one helps you
May 17th, 2009
Since the new century there has been new establishment of bankruptcy laws. These different types offer several options in how the bankruptcy will work, how debts will be cleared|settling the debts and instituting who can file what type of bankruptcy. Not every type of bankruptcy is ideal for everyone and it is of utmost importance that you select the right type of bankruptcy when filing, so you can benefit the most.
There are 3 most common types of bankruptcy:
Chapter 7 bankruptcy can be filed by individuals or businesses. This type of bankruptcy allows the debts to be wipe clean with little or no repayment.
Under this type of bankruptcy one will see that he can have some possessions exempted from selling and everything not exempted is sold to repay debts.
Once the bankruptcy is approved the persons debts filed under the bankruptcy are cleared.
Chapter 11 bankruptcy is similar to Chapter 7 as it can be filed by both business and individuals. It is usually reserved for businesses, though.
This type of bankruptcy is best for those with assets. It is a repayment plan that allows a person or business to repay debts in a way they can afford while also keeping all their assets.
Usually this is filed by a business because during the bankruptcy process the business can still remain operational.
Chapter 13 is another repayment plan for individuals only. Under this chapter a person get to keep their assets while repaying their debts and keeping away from common collection methods.
The bankruptcy laws protect a person or business from collection processes. The creditors cannot proceed with the collection process once this is filed. They can not file court charges or claims. They can not continue to send letters or call a debtor. They can not do anything outside of the bankruptcy proceedings.
So which is the best chapter for you? The answer is: It depends. You have to consider your assets and debts. Ultimately the debtor ought to look at clearing your debts without losing all your current possessions. In order to best do this you need to look at what property you own that is exempt and if you have any property that is not exempt.
Bankruptcy should not be considered as a way to get out of debt. It is intended to be a way to enable you get back on track. Most people prefer Chapter 7 because the debtor can keep some of their possessions. New laws have prevented many debtors from filing Chapter 7 because they have the ability to pay debts.
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