Different Types Of Bankruptcy

Learn the different types of bankruptcy to get an idea of which choice will be best for you.  However, your bankruptcy lawyer will give you more detailed information for your situation.   

                    Two Major Bankruptcy Choices

Based upon your income, assests and your decision to get either a complete discharge of debts or have a payment plan created to repay your debtors, you have choices to make.  

There are two basic types of bankruptcy cases provided under the law:
 
  • Chapter 7 is known as "straight" bankruptcy. A trustee is appointed to take over your property which exceeds certain limits called "exemptions."  Any property of value will be sold or turned into money to pay your creditors.   Usually, all property is exempt and you won't lose anything depending upon the state where you live and applicable federal laws. 
  • With Chapter 13 you can usually keep your property, but you must earn wages or have some source of regular income.  The a plan must be filed to pay debts (or parts of debts) from your current income. 

    Called, debt adjustment, the judge must approve your repayment plan and your budget.  When approved, a trustee is appointed and will collect the payments from you, pay your creditors, and make sure you live up to the terms of your repayment plan.   

The Different Types Of Bankruptcy Facts

If you have already filed your bankruptcy under Chapter 7 you may be able to change your case to another chapter.

Your bankruptcy may be reported on your credit report for as long as ten years.  It can also affect your ability to obtain credit in the future.  

Either type of case may be filed individually or by a married couple filing jointly. 

If your income is above the median income for a family the size of your household in your state, you may have to file a Chapter 13 case. 

If the consumer is found to have a certain amount left over that could be paid to unsecured creditors, the bankruptcy court may decide that the consumer can not file a chapter 7 case, unless there are special extenuating circumstances.  


Other Types of Bankruptcy:  

Chapter 11: Used mostly by businesses, it allows businesses to continue to operate.  However the creditors and the court must approve the plan created to repay debts.  There is not trustee unless the judge decides one is needed.  If a trustee is appointed, he will take control of the business and property.

Chapter 12: It is similar to Chapter 13, but it is for family farmers and family fishermen.

Learn More About The Different Types Of Bankruptcy 

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Types of Bankruptcy and all associated materials and related studies are the complete work of the site's author, Margaret Lukasik, and cannot be copied by any means without her express written permission.


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