There are three varieties of bankruptcy for individuals: Chapter 7, Chapter 11, and Chapter 13.
Chapter 7 is the most prevalent form of bankruptcy for individuals. It is often referred to as the straight bankruptcy or liquidation because the debt is discharged by liquidating the debtor's assets (some assets, such as the residence, are exempt for individuals). In accordance with revisions made to this chapter in 2005, the individual must qualify before filing. In order to qualify, their annual income must be below the state average. In the case of student loans, this was done to defend the financial institutions and government that had guaranteed the majority of the debt.
In Chapter 7 bankruptcy, both secured and unsecured debts are dischargeable. However, the court may seize and sell some of the individual's assets in order to satisfy a portion of the secured debt. Chapter 7 provides the greatest financial relief for creditors.
Chapter 13 bankruptcy is the second most prevalent type of personal bankruptcy. This is known as the restructuring. In this instance, the court appoints a trustee who devises a repayment plan acceptable to creditors and feasible for the debtor. By feasible, we mean a monthly repayment plan that leaves the borrower with sufficient funds for basic living expenses such as housing, food, and transportation. A maximum of five years is granted to the debtor to complete these payments.
Companies can petition for Chapter 7 bankruptcy protection. Typically, this involves ceasing all operations and selling all assets. Businesses can use Chapter 11 to restructure or renegotiate their debts until they are paid off. This enables them to remain in business and potentially address their financial or organizational issues. An initial consultation with an attorney will assist in determining which types of claims a person is eligible to submit. They must apply for Chapter 13 bankruptcy protection.
When contemplating bankruptcy, it is crucial to retain legal representation. The attorney can advise you on which chapter to register under based on your specific situation. In addition, they will complete all paperwork and present it at the hearing.""
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