Picking a Direction When Filing Bankruptcy
Under American bankruptcy law, there are basically two types of bankruptcies. The first is one that leads to a complete discharge of your debts. The second is one that allows you to restructure your debts in order to buy time to pay off as much of them as possible. Before you sit down to talk with an attorney about bankruptcy law services, it may be helpful to learn about each of these two options.
Chapter 7 bankruptcy is the process of discharging unsecured debts. An unsecured debt is one that is not backed by anything tangible, such as a house, a car, or another asset. These cases typically cover payments on things like utility bills, credit card debts, and vehicle loans. If you have questions about the ability to discharge a debt, it's wise to have a bankruptcy attorney services firm look at your situation before you file.
When having unsecured debts discharged, a person is required by the court to liquidate as much in the way of assets as possible to pay off creditors. Some room is given for practical needs, such as keeping a vehicle to get to and from work. For example, a person who owns three vehicles would be ordered to sell two of them. Likewise, the judge would probably instruct the person to keep the vehicle that is the cheapest in value and most practical.
Chapter 11 and Chapter 13 bankruptcy filings are very similar. Filing Chapter 13 is largely for personal debts, while Chapter 11 is intended for restructuring business debts and also some types of farm-related debts. Owners of unincorporated businesses sometimes have to restructure debts under Chapter 11 due to organizational restrictions.
When restructuring debts, the court usually sets up a schedule of three to five years to pay things down. Creditors are typically asked to reduce the obligations a bit, but it's rare that they don't get the bulk of what they're owed back. A bankruptcy attorney services firm can give you some idea of what the court will expect you to pay.
If it becomes apparent that a person cannot complete a repayment plan under one of these chapters, the court may still allow them to move to Chapter 7 filing. There are also cases where any remaining debts may be discharged as long as all payments were made in full and on time.
Contact a bankruptcy law service like that of Charles J Schneider PC for more information.