The Different Types of Bankruptcies
Are you barely keeping your head above water? If finances are keeping you down, it may be time to consider bankruptcy. There are several different types of bankruptcy. The type that you need to file depends on your personal circumstances.
Chapter 11 Bankruptcy
Both businesses and individuals can ask a bankruptcy attorney Columbia MD to help them file for chapter 11 bankruptcy. This typically includes the reorganization of someone’s business, creating and implementing a plan for paying the money back to creditors. A court trustee must approve the plan and oversee its implementation. Once the filer completes the repayments, the remaining debts get discharged. This type of bankruptcy can take years to complete.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is very similar to chapter 11. The big difference is that it allows someone who has a regular income to determine how they pay back some of their debts. Chapter 13 is best for people who can pay some of their debts but do not make enough money to pay off all of them. The court receives a potential payment plan and a trustee either approves or denies it. When approved, the trustee ensures the individual pays the debts as stated. Working through a chapter 13 payment plan allows for some debt to be dismissed. The process typically takes 3-5 years.
Chapter 7 Bankruptcy
A chapter 7 bankruptcy is a liquidation plan. There is no repayment plan because the filer instead sells his or her assets to pay off as much of the debt as possible. Your income is what determines whether you qualify to file chapter 7. If it’s below your state’s median, you can usually file chapter 7. However, if your income is above the median, you’ll need to show that you don’t have the means to pay back your debts by passing a means test. If you file chapter 7, some of your assets are exempt, including your home and car, as long as you continue to make payments on them if necessary.
Filing for bankruptcy is a complicated process. Always work with a reputable bankruptcy attorney for the best results.