Bankruptcy Basics: Know Your Options and Their Differences

Bankruptcy

People consider filing for bankruptcy as a way to deal with debt mismanagement. As it requires specific procedures, you may consult bankruptcy specialists like Baim Law to assist you in the process.

Here are the different types of bankruptcy you can apply for:

Chapter 7: “Fresh start” Bankruptcy

Under this type, individuals are still allowed to keep certain exempt property including a family car, some amount of cash (about $10,000-$20,000) or other property of equivalent value. Though the court cancels your debts, you still have to give up any non-exempt property to the trustee to pay to your creditors.

Bankruptcy

Chapter 11: Business Reorganization

This is normally applicable for businesses, but individuals can file for it as well. Business or individual debtors still have possession of their assets. They need to formulate a repayment plan, however, to pay creditors for a period. The court determines whether such proposal is feasible or not, or if it complies with the bankruptcy law.

Chapter 13: Reorganization

This allows you to keep your valuable property that may be taken away because of past due payments. If you make the necessary payment, you may keep certain properties like your home or your car. This includes regular monthly payments and payment toward the amount overdue. You can have between three and five years to settle the debt or arrears.

Keep in mind, however, that bankruptcy isn’t always bad, contrary to what most people think. You can look at it as an opportunity to rebuild your finances and start anew.