In the US law there are a number of new bankruptcy laws being established to cater to the increasing need of bankruptcy cases. The new laws enable the debtors and creditors more flexibility in filing bankruptcy orders, how debts will be cleared|settling the debts and who can file the type of bankruptcy. As the new laws are more clearer, not every type of bankruptcy is suitable for everyone and it is of utmost importance that you select the right type of bankruptcy when filing, so you can benefit the most out of the process.
I will show the 3 common chapters:
Chapter 7 bankruptcy is the most common process as it can be filed by individuals or businesses. This type of bankruptcy allows the debts to be wipe clean with little or no repayment.
Under this type of bankruptcy one will see that some of the debtor’s properties can be exempted and everything not exempted is sold to pay debts.
Once the bankruptcy is approved the persons debts filed under the bankruptcy are cleared.
Chapter 11 bankruptcy is similar to Chapter 7 as it can be filed by both business and individuals. It is usually reserved for businesses, though.
This type of bankruptcy is best for those with a lot of assets and a lot of debt. This chapter is some sort of a repayment plan so that a business can repay the debts while keeping their properties.
Under this chapter, businesses can still remain run as per normal, which is a very good option for many.
Chapter 13 is another repayment plan for individuals only. Under this chapter a person get to keep their assets while repaying their debts and avoiding common collection methods.
The bankruptcy laws protect a person or business from collection processes. The creditors cannot proceed with the collection process once this is filed. They can not file court charges or claims. They can not continue to send letters or call a debtor. They can not do anything outside of the bankruptcy proceedings.
The choice of what type of bankruptcy to file is really based upon each person’s financial status. Always look at your assets and debts carefully before you decide. In the end, you should be concerned with the best way to remove your financial problems while at the same time not losing the things you own. In order to best do this you need to look at what property you own that is exempt and if you have any property that is not exempt.
As an advice, one should consider Bankruptcy as the last resort. It should be seen as a way to help a person to restart your life again. Do not think that you can get away with Chapter 7 because debts are completely eliminated. New laws have prevented many people from filing Chapter 7 because they have the ability to pay debts.
