Types of Bankruptcy

• Chapter 7 Bankruptcy
  When a person or family has no way of paying their debts, even over time, most of these debts can be forgiven completely. Chapter 7 provides people with a fresh start by wiping out most debts, including such obligations as credit cards, medical bills, and certain tax liabilities. A petition is filed with the United States Bankruptcy Court seeking a total liquidation and elimination of all debts and obligations to satisfy legitimately incurred unsecured debts. While a Chapter 7 is a liquidation Bankruptcy, in many cases it is possible to keep your home, automobile, retirement funds, bank accounts, and personal property while eliminating most debts.

• Chapter 13 Bankruptcy
  When a person is able to repay debts over a longer period or at a special repayment rate, Chapter 13 allows individuals with a regular income to save their assets from repossession or foreclosure. A petition is filed with the United States Bankruptcy Court seeking an Order allowing the debtor to keep certain secured property (ie: a home, a car) while paying down some or all of their debts with a portion of future earnings over a period of time. A reorganization plan is created to assist in the repayment of all debts, including mortgage arrears and a percentage (or all) of other monies owed over a three to five year period, without incurring additional interest or penalties on these debts.

• Chapter 11 Bankruptcy
  This is for a business that needs a ‘second wind’ – some immediate relief from debts so it can continue and get on its feet. Chapter 11 allows corporations to protect their assets from creditors and to continue to operate their business while they formulate a plan to reorganize. Ordinarily a corporation has 120 days to file its plan and present it to creditors for their review and approval. Once approved by the court, the corporation emerges from bankruptcy, often with significantly reduced financial obligations.