Beginning with Chapter 7 is the most logical choice. It is what most people probably think of when they consider bankruptcy. Chapter 7 bankruptcy discharges all of your debts, ideally all of them, but in most cases, the vast majority of them.
As a consequence, your property is frequently sold or liquidated. This is to repay some of these debts in full or in part. Certain property will be exempt from this, but you will lose the majority of your possessions. It is the path with the clearest slate, but the most severe consequences.
Next, we'll look at Chapter 13 bankruptcy. Here, you create a payment schedule spanning between three and five years. This provides you with relief from multiple creditors, their interest rates, and payment amounts. If you have a steady income that is substantial enough to qualify for a particular plan, you can pay off your debts using this new plan and retain your property, such as your home.
Now, we will return to Chapter 11. This type of bankruptcy is typically utilized by corporations, partnerships, and other business entities. It is called reorganization bankruptcy.
By submitting a Chapter 11 petition, business owners hope to keep their company alive, viable, and operational. Certain debts can be eliminated, allowing the company to continue operations. Even assets can be sold in order to balance the business's income and expenses, achieve profitability, remain operational, and pay off additional debts.
Hopefully, you have a better understanding of the fundamentals and the differences between the various chapters of bankruptcy. Before proceeding, you should always consult with an experienced local attorney who can guide you through the process, determine the best course of action, and produce a favorable outcome. There may even be alternatives to bankruptcy available to you, allowing you to avoid filing.""
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