Understanding The Different Bankruptcy Chapters
Many individuals believe that filing for bankruptcy is the best option they have in relieving their debt. However, many do not fully understand that there are different bankruptcy chapters to choose from depending on their specific case. Furthermore, choosing to file for bankruptcy is the beginning of many decisions involved in the bankruptcy process. The process can be overwhelming if you are not familiar with the procedures and legal terminology, so it is important to seek legal advice and speak with an experienced bankruptcy attorney before beginning any bankruptcy process to know which chapter is right for you.
The Bankruptcy Code is the federal law that allows individuals to file for bankruptcy protection, and the code is further broken down into several chapters. For example,
Filing for Chapter 7 is also known as the Liquidation Chapter. When filing for this chapter, the debtor which is the term given to the person filing for bankruptcy relief must give up property that is not exempt. In turn the property is sold and the money gained is distributed to creditors. When filing under chapter 7, debtors tend to keep all of their property except property that is extremely valuable or property that the debtor cannot exempt.
When filing for Chapter 11 it is also known as the Reorganization Chapter and is normally used by businesses and individuals whose debts are exceptionally large.
A Chapter 12 is a bankruptcy chapter intended for family farmers or fishermen.
Furthermore, a Chapter 13 is a different type of Reorganization that is used by individuals to pay all or most of their debts over a period of years with their current income.
Now that you recognize the different bankruptcy chapters individuals can file you should contact a knowledgeable bankruptcy attorney to determine which chapter is right for you. You do not want to make a wrong choice that could result in greater loss of some or all of your assets.