There are three primary varieties of bankruptcy; typically, a bankruptcy attorney will assist you in determining which one is most appropriate for your situation.
In Chapter 7 bankruptcy, all unsecured debts are eliminated. This is the most common form of bankruptcy; it essentially wipes the slate clean and allows you to start from scratch. Chapter 7 bankruptcy is available to both individuals and small businesses.
Chapter 13 bankruptcy is also used by individuals and small businesses to restructure the amount owed and the monthly payment. This is typically filed when an individual has taken a pay cut or a business has experienced a decline in profits, but still earns too much to qualify for chapter 7 bankruptcy. Chapter 13 allows individuals and businesses to repay their debts, but at a reduced amount or over an extended period of time.
Chapter 11 bankruptcy Chapter 11 bankruptcy is comparable to chapter 13, with the exception that it is typically used by individuals and large businesses with extremely high income and debt. Chapter 11 bankruptcy has significantly more restrictions and regulations than the other two types.
Bankruptcy should only be used as a last resort, as it will destroy your credit score and remain on your credit report for up to ten years. There are alternatives to bankruptcy, such as credit counseling and consolidation of debts. There are also situations in which you can no longer afford to pay your debts, but bankruptcy is not required.""
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