Types of bankruptcies

| December 11, 2011 | 0 Comments
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In talking about bankruptcy, you should know that there are three main types of bankruptcies just in case you are considering filing for one. We have the chapter seven, chapter eleven and chapter thirteen bankruptcies and they come with their differences and when you know these differences, it helps you in making an informed decision of the type of bankruptcy you should be filing for in case you find yourself in a financial situation or crisis that demands that as the option out of it. Although, it is advised that you try out other methods of salvaging your financial troubles but in the case they don’t work out for you, you can then file for bankruptcy. You may also seek legal assistance from a bankruptcy law office when you’ve decided to file for bankruptcy.

The first being chapter seven bankruptcy has always been the most common among the three main types of bankruptcies. It is also known as liquidation. In this case, all your non-exempt property is sold off and the proceeds made are used in clearing your debts. Even though this type of bankruptcy is open to both businesses and individuals, it is mostly utilized by individuals since businesses shy away from it based on the fact that interruptions are experienced in the daily running of businesses. For the individual, it becomes a new journey after the assets have been sold and used in offsetting his or her debts.

The second among the list of the types of bankruptcies is the chapter eleven. Unlike the chapter seven, the business owner does not have to go into liquidation. Rather, a grace period of one hundred and twenty days is given to the applicant after the application must have been filed. Within this period, the business is mandated to come up with a debt repayment plan which if accepted by creditors, will be implemented and where denied or such plan was not submitted, the creditors are given the option to draw up a plan and the business owner or individual is mandated to adhere to the creditor’s debt repayment plan.

The last but not the list on the various types of bankruptcies is chapter thirteen. Although it shares similarities with chapter eleven, the only difference is that it is specifically designed for individuals and not businesses. In this case, the individual is not required to liquidate instead with their assets intact, he or she is given between 3 and 5 years to work and pay off whatever debt they owe and in some cases, some debts are forgiven.

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