Get to Know Chapters of Bankruptcy & which one helps you
Since the turn of the century there has been new establishment of bankruptcy laws. The new laws allow the debtors and creditors more flexibility in filing bankruptcy orders, setting up repayment and instituting who can file what type of bankruptcy. As the new laws are more comprehensive, not every type of bankruptcy is suitable for every situation and it is important to make sure that you select the right type of bankruptcy when filing, so you can get the most out of the process.
Here are the 3 most common types of bankruptcy:
Chapter 7 bankruptcy is the most common process as it can be filed by individuals or businesses. This type of bankruptcy wipes the debts 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 pay debts.
Under this bankruptcy, a person’s debts are cleared.
Chapter 11 bankruptcy is similar to Chapter 7 as it can be filed by both business and individuals. However, this chapter is more skewed to businesses, though.
This type of bankruptcy is best for those with assets. This chapter is some sort of a repayment plan so that a business can repay the debts while keeping their properties.
Under this chapter, businesses can still remain functional, which is a very good option for many.
Chapter 13 is more for individuals. It allows a person to keep their properties while repaying their debts and avoiding common collection methods.
The bankruptcy laws protect a person or business from the creditors. Once bankruptcy is filed creditors must stop all collection processes. Creditors cannot file court charges, send letters to debtors nor to do anything that may harass the debtor.
So which is the best option? The answer is: It depends. You have to consider your assets and debts. Ultimately one should concerned with the best way to clear your financial problems while at the same time not losing the things you own. 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 seen as an avenue to get out of debt. It should be seen as a way to help a person to get back on track. It is wrong to just opt for Chapter 7 because the debtor can keep some of their possessions. The revised laws have imposed restrictions that stops a number of people from filing Chapter 7 when they have the ability to pay debts.