Are there different types? Which is best for me?
Bankruptcy is a legal process in which consumers and businesses can eliminate or repay some or all of their debts under the protection of the federal bankruptcy court. There are six types of bankruptcy under Title 11 of the United States Bankruptcy Code. To obtain relief from debt, a debtor must declare bankruptcy under a specific section of the Bankruptcy Code through the United States Bankruptcy Court.
Of the several different kinds of bankruptcy, individuals who decide to file for personal bankruptcy typically choose between two options:
Liquidation bankruptcy (or Chapter 7) A consumer or business asks the court to discharge the debts owed (some debts cannot be discharged). In exchange, the business’s assets or the consumer’s property is sold (liquidated) and the proceeds are used to pay off the creditors. As much as 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases.
Reorganization bankruptcy (or Chapter 13) Chapter 13 involves filing a plan with the bankruptcy court suggesting how you will repay your debt. Some debts must be repaid in full while others require only a percentage or nothing at all. Filing for Chapter 13 often allows you to keep your possessions and property and involves establishing a three- to five-year repayment plan with the bankruptcy court to begin paying off your debts.
For additional information, contact Jacob Braunstein at 503-505-0411.