Chapter 7 bankruptcy is the most common type and is commonly referred to as ""personal"" bankruptcy. Chapter 7 is typically utilized by individuals, but some businesses may also qualify to file under this chapter. If this form of bankruptcy filing is approved, the majority of debts are discharged and debtors are prohibited from attempting to collect the discharged debt.
With the exception of holdings that may be exempted by your state, as much property and assets as feasible are sold to pay off the debts. Consult your local state statutes for additional information on this asset exemption. All non-exempt assets and property must be transferred to a trustee for disposition.
Chapter 7 is typically completed within three to six months, though a particularly complex case may take longer. This form of bankruptcy cannot be filed again until eight years have passed since the conclusion of the first case.
The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act made it difficult for many people to qualify for Chapter 7. Consultation with an attorney is recommended.
Chapter 11 is primarily for companies undergoing reorganization and layoffs. It is a type of bankruptcy that involves an intricate reorganization of finances and partial debt relief. Chapter 11 requires the assistance of a licensed attorney who can assist with comprehending the different types of bankruptcy and their legal complexities.
Chapter 12 is exclusive to family farmers and allows them to resolve debt with a repayment plan.
Chapter 13 bankruptcy is for individuals and is commonly known as ""reorganization"" bankruptcy. Unlike Chapter 7, it allows the filing party to retain property, such as a mortgaged home, that they would otherwise forfeit.
Under Chapter 13, debt is repaid over a period of time (typically 3 to 5 years) according to a court-approved payment plan overseen by a court-appointed trustee. There are a number of restrictions on this form of bankruptcy, and if the payment plan is not adhered to, the court may force the debtor into Chapter 7 bankruptcy. Similar to Chapter 11, Chapter 13 requires legal representation.
Ensure that you have conducted thorough investigation or obtained legal counsel prior to filing. Understanding the different forms of bankruptcy is necessary to avoid incurring additional costs. Knowledge can save you a great deal of time, effort, and money.""
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