Saturday, April 25, 2009

Confused which bankruptcy to file? Check common types of bankruptcy

Chapter 7: It's also known as liquidation bankruptcy, which means your liquid assets are used to repay creditors. Liquid assets are those assets that can be converted into cash quickly, e.g. saving and checking accounts. Some of your liquid assets are distributed to the creditors by courts. Any remaining debt after distribution of liquid assets to your creditors is discharged. After this you are not liable to repay any debt and no creditors or third party collection agencies can claim any debt from you.

To qualify for chapter 7 bankruptcy, you need to show as per your family size your income is less than the median in your state.

Chapter 11: Also known as reorganization and commonly used by the owner of a business or corporation. In chapter 11 bankruptcy, you can continue your business and maintain ownership of all your assets and to pay off your creditors, work out a reorganization plan.

Chapter 12: Especially for family farmers and fishermen. In chapter 12 bankruptcy, debtors can control their assets by full ownership and work out a reorganization plan to pay off the creditors. It’s like chapter 13 bankruptcy but stretches over three year.

Chapter 13: Filing chapter 13 bankruptcy is adjusting your debt with regular income and reconstructing your repayment plan. You can repay some creditors in full with interest, others a part of your debt in a time period of three to five year with a repayment plan.

1 comment:

Sonnie said...

how I hope there will be a bankruptcy law for individuals.