Understanding the types of bankruptcy may seem difficult and confusing. Most people have heard of the chapters and figures, but do not really know what they mean. The four main types of bankruptcy to Chapter 7, Chapter 11, Chapter 12 and Chapter 13. The names are based on chapters, or pieces of financial legislation Federal bankruptcy retailer.
Chapter 7 is the most common species of bankruptcy and is often described as "personal" bankruptcy. It is generally used by individuals, but some companies may qualify to file under Chapter 7 as well. If this type of deposit balance is accepted, most debts are canceled and debtors are allowed to try to collect on the debt eliminated.
All goods and assets are sold to repay debts, wherever possible, except for operations that may be exempted by your state. Check your laws the local state for more information on this exemption. All non-exempt property and assets must be given to a director appointed for sale.
Chapter 7 usually takes three to six months to complete, if a particularly complicated case may take longer to resolve. This type of bankruptcy may only be filed again eight years after the completion of the original case.
The Bankruptcy Abuse Prevention and Consumer Protection Act which was enacted in 2005, it was difficult for many individuals to qualify for Chapter 7. Consultation with a counsel is advised.
Chapter 11 is primarily for business restructuring and cut backs. It is a very complicated type of bankruptcy, involving a complex financial restructuring and partial forgiveness of debt. The assistance of a licensed lawyer who can assist in understanding the types of bankruptcy and their legal complications is absolutely necessary for chapter 11.
Chapter 12 is exclusively for families of farmers, and this enables them to tackle the debt with a schedule of repayments.
Chapter 13 is for individuals and often referred to as "reorganization" bankruptcy. Unlike Chapter 7, it allows the party filing to preserve property that they may lose, like a mortgaged house.
Under Chapter 13, the debt is repaid over a number (usually 3 to 5) years under a payment plan approved by a court supervised by a court-appointed trustee. There are a number of limitations to this type of bankruptcy and if the payment schedule is not required of the court in May require the person in bankruptcy under Chapter 7. As Chapter 11, Chapter 13 requires the assistance of a lawyer.
Before filing, make sure you have done a search firm or acquired the assistance of a lawyer. Understanding the types of bankruptcy is important to avoid additional charges. A little knowledge can save you much time, trouble and money.
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