FAQ on Bankruptcy
I’m thinking of filing for bankruptcy, what are my options?
- Chapter 7 Bankruptcy
- Chapter 11 Bankruptcy
- Chapter 13 Bankruptcy
What is Chapter 7 Bankruptcy?
A Chapter 7 bankruptcy is commonly referred to as a liquidation or a “straight” bankruptcy. What a Chapter 7 bankruptcy does is, it essentially wipes out all of your debts that are unsecured. Examples are credit cards, hospital bills, judgments from creditors, and deficiency.
Is there anything that a Chapter 7 Bankruptcy does not include?
There are 5 things that cannot be discharged through Chapter 7 bankruptcy and those are; alimony, child support, most students loans, criminal restitution, or if you are judged with a fraud.
What is Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy is a reorganization or similar to a loan consolidation. Chapter 13 bankruptcy is for those who are looking to save their car or save their home. If you have access income each month, but cannot afford the burdens of debt that come with a credit card or medical bills and you would still like to retain your property then Chapter 13 might be the right type of bankruptcy for you.
What is Chapter 11 bankruptcy?
Usually when people hear Chapter 11 bankruptcy they think of businesses and they believe that individuals cannot file a Chapter 11 bankruptcy. However, this is not true. A Chapter 11 bankruptcy is similar to Chapter 13 bankruptcy in that it is a reorganization or a restructuring. What happens in Chapter 11 bankruptcy is the debtor is called a “debtor in possession.” The debtor then remains in control of their assets and finances. Once the Chapter 11 bankruptcy petition is filed it allows the debtor time to reorganize their debts and propose a plan that is then voted upon by creditors. If you are an individual or sole proprietor and you have a business that you run a Chapter 11 bankruptcy may be for you. Chapter 11 bankruptcy also may be your best option if you are a real estate investor whom has multiple properties under water.