Types of Bankruptcy

There are different types of bankruptcy available for individuals who find themselves deep in debt and can find no means of repaying their creditors.

It is very helpful to determine which type of bankruptcy will allow you to qualify to submit your court case. Each type has different qualifications which must be met in order to use that bankruptcy type. Some are designed to be better for certain situations than others. Here is a brief overview of the most common differently types of bankruptcy.

Chapter 7 Bankruptcy

This type of bankruptcy does not involve having to file a repayment plan but it does require liquidation of certain assets if owned by the debtor. Property defined as "exempt" which does not have to be sold.

To qualify for Chapter Seven bankruptcy an individual, partnership, or other type of business entity must be subjected to the means test. You can learn specifics about this important means test online or from a paralegal or attorney.

Credit counseling is required before filing this type of bankruptcy. Individuals may, in some cases, have their debts discharged without having to repay them unless they have assets which must be liquidated.

Businesses do not qualify for the exact same benefits. All requested and required paperwork must be filed on a timely basis. Forms to be used in this type of bankruptcy can be located online.

The fees for individual bankruptcies of this type involve a case filing fee, miscellaneous administration fees, and a trustee surcharge. These are normally paid upon filing the case but in some cases the court may agree to a payment plan of not more than four installments.

If a couple file jointly, only one set of fees will apply. If the debtor is in the low income bracket, they may not even have to pay the fees, having them waived by the court. These bankruptcy cases can often be resolved within 6 months to 1 year from the date of filing.

Call 866-200-8196 toll-free or complete the following confidential case evaluation and speak with an experienced attorney for free:

Chapter 13 Bankruptcy

This type of bankruptcy enables people with regular income to build a plan to repay part or all of their debts. With the trustee, a plan is developed to make affordable installments to creditors over a period of three to five years. When income is low, the repayment plan may be longer. During the repayment period, the creditors can not continue efforts to collect the money through collection agencies.

Advantages of Chapter 13 bankruptcy include not having to liquidate assets such as homes. Secured debts can be rescheduled and extend the payments over the period of the Chapter 13 repayment plan, often lowering the payments to an affordable amount. Co-signers may be protected in this type of bankruptcy. In fact, Chapter 13 acts much like a consolidation loan where the debtor makes scheduled plan payment to the bankruptcy trustee. The trustee is then responsible for distribution of the payments to the creditors. Individuals are not forced to face their creditors while protected by the Chapter 13 bankruptcy.

Eligibility includes individuals, self-employed, and people with unincorporated businesses provided the unsecured debts are under $336,900 and secured debts are only slightly over $1 million. Periodically, these amounts are adjusted, so be sure to check the most current consumer information in this regard. Corporations or partnerships may be file Chapter 13 bankruptcy.

There are restrictions as to what individuals can file Chapter 13. If you have filed under any chapter in the preceding 180 days as well as other specific situations, you may not qualify. Credit counseling is required to qualify.

Fees are not significantly different from those when filing a Chapter Seven bankruptcy. Because of the repayment plan established, the debt is not fully discharged until the final payments per the repayment schedule have been completed.

Chapter 11 Bankruptcy

Called the reorganization bankruptcy, this is seldom used by individuals but applies more to business entities. However, in a few cases, individuals may qualify. This type of bankruptcy may require years in court to complete and often is not the best choice for individuals and families who find they need to file bankruptcy. However, a few special cases may find this method works well for them. Seek the advice of an attorney if your research indicates you might wish to attempt this type of bankruptcy. The fees are very high and the timeline very long so it is not a "quick fix" as with the Chapter Seven for those who can qualify for that type of bankruptcy.

Chapter 12 Bankruptcy

This different type of bankruptcy is commonly used by farmers, commercial fishermen, and similar people with regular annual income. It is more streamlined for those individuals who fit into the specific areas which qualify for this type of bankruptcy. Specific criteria must be met for a person or business to qualify for this type of court case. Filing in this type of bankruptcy, at least in the majority of cases, stop the creditors bugging the debtor directly, stopping telephone calls, garnishments, and even lawsuits.