No one wants to file bankruptcy. However, sometimes, through no fault of your own, the bills just become unmanageable. Bankruptcy offers a chance to regroup and start over without being hassled with creditors calling or the threat of garnishment or foreclosure.
Types of bankruptcy
There are several types of bankruptcy cases that can be filed in the United States.
Chapter 7 — Chapter 7 bankruptcy, the most common form of bankruptcy in the United States, is liquidation bankruptcy. Much of your unsecured debt is discharged under a Chapter 7 bankruptcy. That means that such debt is written off. Some types of debt cannot be discharged under Chapter 7 bankruptcy. Those debts include child support, student loans, income tax debt less than three years old and payments to settle a criminal or civil court judgment. Some property is exempt from being sold under Chapter 7 bankruptcy, such as your primary residence, one car and a reasonable amount of personal possessions.
Chapter 13 — Chapter 13 bankruptcy offers a chance to reorganize your finances and repay your creditors over a period of up to 60 months. Unlike Chapter 7 bankruptcy, Chapter 13 allows you to keep all of your property, even rental houses and boats. This is a good choice for people who have been out of work or ill and unable to work, but are now gainfully employed. Debtors in Chapter 13 bankruptcy make a monthly payment to a court trustee who distributes their funds to their creditors.
Chapter 12 — Chapter 12 bankruptcy is designed for family farmers and fisherman. It is a restructuring plan, similar to Chapter 13, but offers higher debt ceilings and extra exemptions designed to cover farm machinery and other farm or fishing equipment.
Speak With Your Local Attorney today.