7th Chapter
This is one of the most common ways for individuals and businesses to receive a clean financial slate and a second opportunity. In essence, debtors are given a fresh start, a clear slate. The majority of the debtor's possessions are liquidated, meaning they are sold and applied to the debts owed. However, some exemptions exist under federal and state law. The debtor may be able to retain his or her property and personal belongings, such as apparel. Each applicant is designated a trustee to oversee this procedure. After the person's assets have been liquidated, the trustee is responsible for paying creditors, and many of the person's debts are discharged. Not every debt is forgiven. This Chapter does not permit the forgiveness of child support, alimony, or taxes.
11 Chapter
Chapter 11 was originally intended for large corporations, but it is now available to individuals as well. This form of bankruptcy, unlike Chapter 7, is a reorganization plan rather than a liquidation plan. This means that a trustee is still assigned to the debtor, but the trustee develops a manageable repayment plan. These plans typically last between three and five years and must be approved by a magistrate. Chapters 11, 12, and 13 permit filers to retain all of their property. Moreover, these individuals typically pay only a fraction of what they owe.
13 Chapter
This type of bankruptcy closely resembles Chapter 11. Chapter 13 focuses on people who do not wish to liquidate their assets to repay their debts. The sort of payment plan offered to the debtor distinguishes these two types.
If you are having difficulty repaying money you owe, you have a number of options to consider. Before committing to the decision to file for bankruptcy, it may be prudent to consult with an attorney who specializes in this area of law.
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