Types of Bankruptcy Cases Should I Consider?
There are four types of bankruptcy
cases provided under the law:
Chapter 7 is known as
“Straight” or “Fresh Start” or “Liquidation”
Bankruptcy. It requires a debtor to give up
property which exceeds certain limits called
“exemptions”, so the property can be sold to pay
creditors, while allowing the debtor who files to
keep his exempt property, usually including his
home, cars, household goods, pensions, and the
like. The great majority of Chapter 7 cases are
called “no asset” Chapter 7 cases, meaning that
the Debtor kept all his or her property, and there
was nothing to distribute to creditors.
Chapter 11, known as “reorganization,” is used by
businesses, including corporations, and a few
individuals whose debts are very large.
Chapter 12 is reserved for family farmers.
Chapter 13 is called
“debt adjustment” or “debt reorganization.”
Because it causes much of your debt to be paid in
one installment, it is sometimes referred to as
“debt consolidation” as well. It requires a debtor
to file a plan to pay debts (or parts of debts)
from current income.
Most individuals filing bankruptcy will want to file
under either Chapter 7 or 13. Either type of case
may be filed individually or by a married couple