“I need to file for Bankruptcy, but I don’t know which one.” We hear that a lot. The following is a short explanation of the four basic types of bankruptcy. Please contact our Bankruptcy attorney, Shannon Morgan, if you need help.
The Bankruptcy Code provides for four different types of bankruptcy filings for individuals and families, Chapter 7, Chapter 11, Chapter 12 and Chapter 13.
Chapter 7 is one type of bankruptcy that is available for individuals. It is also called straight bankruptcy or liquidation. The bankruptcy court appoints a trustee who administers the bankruptcy. The individual filing for bankruptcy usually retains all the typical types of household goods and clothing. He/she may also retain his/her home and vehicles as long as he/she does not have more equity in those items than he/she can exempt. If the bankruptcy trustee allows an individual in bankruptcy to keep a car secured by a car lien or a house encumbered by a mortgage, the individual filing for bankruptcy must pay all car and mortgage payments as they fall due and pay the insurance on those items. A chapter 7 bankruptcy usually lasts about three to four months. At the end of the bankruptcy, most debts are extinguished through a discharge of debts.
Chapter 11 is occasionally used by individuals with extremely high amounts of secured or unsecured debts but is primarily used by businesses and corporations, which are insolvent, that wish to pay off their debts through a repayment plan.
Chapter 12 is a type of bankruptcy available for family farmers and fishermen. It functions much like chapter 13 in that it is a repayment plan but it is structured so that repayment is on a seasonal schedule to match the Debtor’s income stream.
Chapter 13 is another type of bankruptcy available for individuals. This bankruptcy lasts for the duration of a debt repayment plan, from three to five years. General unsecured creditors are usually only repaid a small percentage of what is owed, but past due taxes must be paid in full, as well as arrearages on secured debt, such as a mortgage or car loan. This bankruptcy may allow individuals to keep a home or car even if they have become seriously delinquent on the loans. At the end of a successful bankruptcy, most debts are extinguished through a discharge of debts.
The Bankruptcy law firm of Tucker Griffin Barnes PC is located in Charlottesville & Palmyra, VA and serves clients facing bankruptcy issues. We offer free consultations so call now to speak to one of our bankruptcy attorneys.
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