Three Forms of Bankruptcy - A Summary of the Major Differences
In recent days debt and its causes has became a burning issue in our society and
economical ups and downs persuaded so many people to take more and financial help to support their day to day life. To common man bankruptcy appears to be an easily approachable and legally convenient way to discharge their debt balances and get rid from debt loaded hectic life.
Revision in laws of bankruptcy allows people to acquire this option to reconstruct their financial miss management. There are basically three forms of bankruptcy i.e. personal or individual, bankruptcy for corporate personal and reorganization in order to provide remedy to the suffering people.
Among these three forms of bankruptcy individual bankruptcy which is also known as chapter 7 is for persons who are suffering with a very difficult financial condition and also don't have a regular mode of earning. The person is subjected to a mean test in to order to assess whether the debtor is eligible for filing bankruptcy or not. If you have a monthly income less than the average capita of your state only then you are eligible for the option.
The court will assign you a trustee who will perform the selling of your properties so as to repay your creditors but you are allowed to exempt some of your property from sale. You should take care that your general conduct should be fine and your debt is not involved with any fraudulent activity before filing for chapter 7.
Another kind of bankruptcy is corporate bankruptcy which is also known as chapter 13 and this option is for those candidates who have regular source of income and they want to repay their debt amount. In this case the debtor must submit a repayment plan to the court to pay either a certain part of debt or in full by using his incoming in future. The court will approve your repayment plan after accessing your financial status and monthly income and provide a time period of minimum 3 years or maximum 5 years to make the payment.
The third form of bankruptcy is reorganization which is helpful for families of farmers in order to discharge their overloaded debt as well as reorganize their business or retain their working land simultaneously.
Three Forms of Bankruptcy - A Summary of the Major Differences