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What is Chapter 7 bankruptcy?

Chapter 7 is the bankruptcy provision most frequently used by individuals. Those who reside in, or own property or a business in, the United States can file for Chapter 7 bankruptcy. Chapter 7 involves the complete liquidation of a debtor’s property to pay creditors and wipe out remaining debts, giving the debtor what’s known as a fresh start. It’s important to know that Chapter 7 bankruptcy will stay on a person’s credit report for ten years. However, it is likely that if you believe you need to file for bankruptcy, your credit has already been affected by your high debt.

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What is Chapter 12 bankruptcy?

Chapter 12 of the Bankruptcy Code is entitled “Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income.” Chapter 12 is designed to help financially distressed family farmers or fishermen who have a regular source of income to repay their debts. Read on for more information on Chapter 12 bankruptcy filings.

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Pros and Cons to Chapter 7 and Chapter 13 Filings

There are several advantages and disadvantages to Chapter 7 bankruptcy and Chapter 13 bankruptcy. One advantage to a Chapter 7 filing is that the amount of debt you can erase is not limited; whereas with Chapter 13 Bankruptcy it might be that you keep all of your property, both exempt and non-exempt.

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What is Chapter 11 bankruptcy?

Chapter 11 is one of the chapters of the US Bankruptcy Code that provides protection to debtors. Chapter 11 bankruptcy is almost exclusively used by businesses due to the expense and complexity of filing for this chapter of bankruptcy. It is appropriate when a business needs to restructure the debts it has and reorganize its finances so it can stay open.

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Differences between Bankruptcy Chapters

There are four main types of bankruptcy filings – they are known as Chapter 7, Chapter 11, Chapter 12 and Chapter 13. They vary in process, purpose and availability. There are scenarios each is better suited; some types are more appropriate for businesses, while others are meant for individual consumer bankruptcies. Click here to learn more.

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