Exploring The Types Of Bankruptcy

You will find several types of bankruptcy available if you are forced into this situation

. Unfortunately, more and more individuals are being forced to file for bankruptcy due to a troubled economy. For every different type of person and situation, you will find a different kinds of bankruptcy to file under. Although this process might seem complicated in the beginning, you will find that your situation will determine your options. Depending on your situation, you will be forced to file under one of several possible Chapters.

There are four types of bankruptcy under which people have the option to file. Which type you will be filing under will depend upon your personal situation. There are many factors that must be considered when deciding what path is right for you.

These various types of bankruptcy are called "Chapters." The first Chapter we will discuss is known as Chapter 7. This has come to be known as liquidation bankruptcy. This means that many assets will be ordered to be sold. This is required to pay off as much of the debt as possible. Although primarily for individuals, corporations may also be eligible. Chapter 7 is extremely common.

Next we have Chapter 11. Although businesses generally file under this Chapter, some individuals are also eligible as well. With this type of bankruptcy, the debtor is allowed to retain their assets and is allowed to function as normal. They are responsible for forming a plan that will allow payment to creditors in an effort to pay off this debt. This is the most complex form of bankruptcy.

Next on the list we will explore Chapter 12 bankruptcy. Chapter 12 is a very specific chapter under which an individual must file. This type only references farmers. As with Chapter 11, the farmer/business will be allowed to retain assets and their farms will be allowed to function properly in an effort to establish a payment plan to eliminate the debt.

The final method of bankruptcy is Chapter 13. Chapter 13 is somewhat akin to Chapter 11. But with this type, the focus is on the individuals. The debtor is allowed to retain assets. A plan to pay the debt is discussed, and usually entails a plan ranging anywhere from three years to five years. Although there is a possibility that much of this debt can be discharged, only the individual situation will determined whether this is a possibility.

Although on the surface filing for bankruptcy seems complicated and daunting, further exploration will reveal that your options are fairly obvious. It is advisable that you speak with an attorney and discuss your options. It is a very unfortunate situation to find yourself in debt, but before filing for bankruptcy, you must consider it your last option, as the impact of it will be with your for many years. If bankruptcy is your only option, weigh your choices carefully and make an intelligent decision.

by: Enrique Castillano

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