Bankruptcy is a difficult process, but it can be made easier when you realize that different situations call for different types of bankruptcy cases. If you decide to file without a lawyer you may end up in the wrong type of case, which is a reason to sit down and speak with a bankruptcy attorney before making a potentially disastrous move.
These are six different types of bankruptcy chapters:
Chapter 7 Bankruptcy: This type of case is also called “liquidation” or “straight” bankruptcy. You will receive a discharge of most types of unsecured debts (credit cards, personal loans, overdrafts, medical and dental bills) but some other bills are not going to be wiped out. In return for this discharge of debt you will be required to surrender certain types of property. Most people file for bankruptcy under Chapter 7, but will opt for other solutions if they have debts that would not be wiped out or would lose property by doing so.
Chapter 13 Bankruptcy: This type of case is called “repayment” bankruptcy. You will be required to repay a portion of your debts in return for keeping all of your property. Chapter 13 is most commonly used by people who do not qualify for Chapter 7 or who want to use the federal laws to repay debts such as past-due mortgage and car loan payments over time in order to save their home or automobile. Chapter 13 payment plans last 3-5 years depending on your household income, property and debt levels.
Chapter 11 Bankruptcy: Formerly reserved for big business interests, Chapter 11 is now being used by consumers who would otherwise file for Chapter 13 but do not qualify due to the amount of debt that they owe. Chapter 11 is extremely complex and costly, but can help if you’ve got a debt load above the limits for Chapter 13.
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