Bankruptcy can be an especially stressful and difficult time for people or businesses to get through. Finding a way to pay off debts or liquidate assets is a timely process and one that can be completely overwhelming. Determining which type of bankruptcy to file for can help to ease a bit of these burdens and make the process easier for those struggling with debts. The different types of bankruptcies are reserved for different circumstances varying from debt amounts, asset amounts, individuals vs businesses, and other reasons. This article will examine the different types of bankruptcies and which one is advised to file for.
Chapter 7 is also known as the liquidation bankruptcy. A court appoints a person to look over the debts of a debtor and ensures that they are liquidating assets in order to pay off their debts. This type of bankruptcy is the most common and property like houses and cars are sometimes exempt. Your local bankruptcy lawyer such as CT Bankruptcy Attorneys can fill you in more on the details of this popular bankruptcy type.
Chapter 9 is something that most people will never have to consider in their lifetimes. However, for cities or municipalities, this may be something they will have to consider. This bankruptcy type is for municipalities to file for bankruptcy. Their debts will have to be determined and an adjustment will have to be made during this bankruptcy in order for a payment plan or other option to take place to pay off debts.
Chapter 11 bankruptcy is generally for businesses or high-earning individuals. For example, a real estate investor may have considerable asset value tied to properties, but may also be in severe debt. Under a chapter 11 bankruptcy, they would adjust their payment plans to their creditors to navigate the bankruptcy and to hold on to their assets.
Chapter 13 is another commonly used bankruptcy type for individuals. Under this plan, if the debt is under a certain amount, the debtor will pay back their debt to creditors over a 3-5 year period.
Chapter 12 & 15
Chapter 12 bankruptcy is for family farmers or family fishermen. If they are in debt and need to file for bankruptcy then they would file for this type to be paid off over a 3-5 year period typically. Chapter 15 is used for those who have debts in other countries, but who also may have assets in the United States.