Bankruptcy allows individuals, couples, and businesses unable to meet their financial obligations relief from repaying some or all of their debt. Bankruptcy laws are designed to protect those who are in debt over their heads and has been in existence since ancient times. Generally speaking, there are two types of bankruptcy, liquidation and reorganization. In a liquidation bankruptcy, debtors must surrender their property, which is sold, and the proceeds distributed to creditors. In return, all debts are permanently discharged. In a reorganization bankruptcy, debtors are allowed to keep their property, but must agree to an installment plan repaying creditors a portion of their debt.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy provides immediate relief and may help you eliminate most types of unsecured debt. Debts such as: unsecured debts like credit cards or personal loans; medical bills; judgments resulting from car accidents; and any deficiencies resulting in repossessed vehicles. In addition to eliminating your debt. Those filing Chapter 7 may typically keep all of their personal property as long as they are current on their car and mortgage payments and there is no significant equity in your possessions. A Chapter 7 bankruptcy is ideal for those who are in over their heads and looking for a fresh start. This works well for those looking to keep their home, keep car and personal belongings. In addition to eliminating most unsecured debt, a Chapter 7 bankruptcy will stop creditor harassment, stop wage garnishment and ends most lawsuits. Furthermore, after discharge, a Chapter 7 Bankruptcy can help you rebuild your credit.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy enables those with regular income to develop a repayment plan for a portion of their debts. Under Chapter 13, debtors propose a repayment plan on which they intend on making installments to creditors over a three to five year period. Depending on the debtor’s current monthly income, will determine whether they are eligible for a 3 year or 5 year period. If the debtor’s monthly income is greater than the state’s applicable median, they must typically repay for a five year term. Those with lower incomes, typically qualify for a three year period. A Chapter 13 may provide an opportunity to save a home from foreclosure. By filing under Chapter 13, individuals can stop foreclosure proceedings potentially curing delinquent mortgage payments over a specified time. Chapter 13 also protects third parties who are liable with the debtor on “consumer debts.” Finally, Chapter 13 acts like a consolidation loan under which the trustee distributes payments to creditors.
Chapter 11 Bankruptcy
Chapter 11 is a form of bankruptcy that involves the reorganization of a debtor’s business affairs and assets. Chapter 11 is typically filed by corporations required to restructure their debts. Chapter 11 gives debtors a fresh start, subject to satisfactory repayment of its obligations under reorganization plan. Many public corporations tend to try to file bankruptcy under Chapter 11 rather than Chapter 7 because it allows them to still run their businesses and control the bankruptcy process. For more information on Chapter 13 Bankruptcy and how to stop a foreclosure sale date fast, click here.
Filing for Bankruptcy
Chapter 7 bankruptcies seem to be the most common. Chapter 7 bankruptcies are liquidation bankruptcies in which debtors must turn over “non-exempt” property to the bankruptcy trustee. Certain property is exempt if it falls within specific categories of assets that debtors are allowed to keep, such as a certain amount of clothing, household items, tools for work, and in some instances, vehicles and the family home. To help you determine which type of bankruptcy is best for you, call us at (847) 398-4793.
To find out if a bankruptcy is right for you, dial (847) 398-4793 to arrange a Free Consultation. When hiring an attorney or anyone to help you save your home, it is always a good idea to look them up on the Better Business Bureau and be sure to read their online reviews.