Even though the economy is showing some signs of improvement, many individuals, families and businesses are still struggling to make ends meet. Although few consider it their first choice, bankruptcy may be the right choice for you to get a “fresh start.” There are five different types of bankruptcy.
Each kind of bankruptcy is referred to by a ‘chapter’ and a short explanation of these bankruptcy chapters follows.
For individuals and families, there are generally two types of bankruptcy: Chapter 7 and Chapter 13. In a Chapter 7 bankruptcy, a trustee is appointed by the Court to liquidate your non-exempt assets and use those monies to pay your creditors. In a Chapter 13 bankruptcy, you would make monthly payments to the Chapter 13 Trustee for as long as 60 months to pay your creditors. At the end of either bankruptcy, you are discharged from your remaining obligations (of course, there are a few exceptions).
Filing bankruptcy for your business can be done through a Chapter 7 or a Chapter 11. A business Chapter 7 works just like a consumer Chapter 7 – it can be a very orderly way of winding down an insolvent business. Alternative, Chapter 11 is for businesses that are seeking to reorganize.
There are also special types of bankruptcy available for municipalities (Chapter 9) and full-time farmers and fishermen (Chapter 12).
If you are struggling to meet your creditors’ demands, are facing foreclosure, or your wages are being garnished you may want to discuss your options with a bankruptcy attorney.
