When you or a loved one faces bankruptcy, it can feel overwhelming. Depending on your circumstances, you might not have to lose everything. There are four different types of bankruptcy laws.
When you determine which type of bankruptcy works best for your situation, you can go to a website to find the specific laws for your state.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is also called straight bankruptcy or liquidation bankruptcy. This type of bankruptcy is available for individuals, partnerships or corporations. When you file for this type of bankruptcy, you're basically asking for all your debts to be wiped out. Most of the time, your property is exempt and won't be taken away. However, sometimes you might find that you need to give up property such as a car or a home if you are behind on your payments or mortgage.
Chapter 11 Bankruptcy
If your business is struggling, you might want to consider filing for Chapter 11 bankruptcy. This law is also known as Reorganization. Filing for Chapter 11 can get tricky since there are numerous details involved. If you plan to file for Chapter 11, you might want to strongly consider hiring an attorney.
Chapter 12 Bankruptcy
Chapter 12 bankruptcy law is unique because it applies only to farmers and fishermen. In this type of bankruptcy, an individual who has steps has the opportunity to pay creditors during a specific amount of time using future earnings. This only applies to individuals who obtain income from a farm that is owned by the individual's family or by an individual who has an income from a commercial fishing operation.
Chapter 13 Bankruptcy
Also called Individual Debt Adjustment, Chapter 13 bankruptcy allows you to file a unique plan, which highlights how you plan to pay off your current and past due debts over the upcoming three to five years. Many find Chapter 13 bankruptcy better than Chapter 11 bankruptcy because it allows you to keep valuable property, such as your car and home, even if you are behind on payments. Your plan for payment must include past due bills, the trustee commission, and the percentage of unsecured debt. If you plan to keep your house and car, you must also continue paying all future payments.
In a tough economy, it's difficult to stay afloat, especially when fate throws obstacles in your path. Bankruptcy offers an opportunity to start fresh. Knowing your bankruptcy filing options gives you an edge as you take your first steps toward economic recovery.
This is a guest post from Delbert Pounds. Make sure you check the website of your local bankruptcy attorney for more information about the types of filings. Call and make an appointment to discuss which is right for you.