If you are considering bankruptcy, it is important to know which category you want to pursue. Most men and women are not aware that there are various different bankruptcy methods. Depending on your occupation, financial standing and preference you could qualify for one or more different kinds of bankruptcy. Carefully evaluate your situation to choose the best possible option, and speak with a lawyer for further input.
Chapter 7 bankruptcy, otherwise known as straight liquidation, is possibly the most common type of bankruptcy. It is also the most severe form. This process is used by individuals in need of a fresh financial start or businesses that need to obliterate debt. People who file for Chapter 7 bankruptcies have no way to pay their existing debt except by selling their assets. Before you can file for Chapter 7, you will be subject to a "means test." This investigation will confirm that you are not able to pay your debts any other way.
In certain states, individuals with an income that is above the average state salary are refused liquidation. If you receive court authorization, then a trustee will take charge of collecting and distributing your assets. All property will be sold and then the money will be used to pay back your creditors. Almost everything is sold, other than belongings that are exempt under federal and state law. Corporate businesses that file a Chapter 7 are not eligible to receive a discharge. Taxes, alimony, child support, student loans and a few other debts are not dischargeable with this form of bankruptcy.
A Chapter 13 bankruptcy, also known as an individual reorganization bankruptcy, is specifically designed for a person who has a large amount of debt, but is receiving a steady income. Each state has a specific limit on the amount of debt that you are allowed to satisfy this way. Check your state bankruptcy code to see if you qualify. This form of bankruptcy can also be used by small businesses.
With this manner, a debtor pays back all of his funds in installments over the course of three to five years. The person is allowed to keep his or her property as long as the debts are met in the provided amount of time. In many cases, you are given the option to outline your own payment plan and present it to the court for approval. A bankruptcy lawyer can help you to sort through your debt and find an installment that will best benefit you and your creditors.
If you are a part of a large business that is undergoing bankruptcy, you will most likely want to file a Chapter 11 bankruptcy claim. This is very similar to a Chapter 13 plan, but with more restrictions to ensure steady and consistent repayment. The most complicated of the bankruptcy plans, it is highly recommended that you only embark on a Chapter 11 bankruptcy with the help of an informed attorney.
A Chapter 12 is a voluntary bankruptcy that was created for commercial fisherman and family farmers who receive a consistent salary. Some seasonal farmers and fisherman are also able to qualify for this type of claim. This option costs less money than a chapter 13 or 11 bankruptcy would, but is strictly limited to men and women who operate on these agricultural grounds.
A Chapter 9 bankruptcy is restricted to municipalities and usually deals with political subdivisions or public agencies. As these bankruptcies involve large factions, they are extremely complex and expensive. Anyone who decides on a Chapter 9 bankruptcy will want plenty of legal help to file a safe and satisfactory claim. If you are still not sure which bankruptcy option is the best for you, you should contact a bankruptcy attorney. These learned individuals can help to give you customized and find a plan that will best satisfy your needs.