Wednesday, 14 October 2015

Types Of Bankruptcies Debtors Can File - Time For A Reality Check!

Posted at  08:26  |  in  Bankruptcy


type of bankruptcies
Although it is true that bankruptcy is a complicated and intimidating process, yet the debtors who are drowning in unsecured debt of all forms are forced to take resort to this option to release themselves from the shackles of debt. Within bankruptcy filings, there are 2 main parties involved, the creditor and the debtor. The debtor is that party which owes the debt and the creditor is an organization which claims that the debtor owes money, service and property. When the debtors fall knee-deep in debt and they think that bankruptcy is the best option to regain control over their finances. But what are the different types of bankruptcies that you can file, on a personal and on a commercial level? Check out this article to know more.

A look at your options with regards to bankruptcy types

Basically, there are 4 types of bankruptcies which are named in the chapters of the United States Bankruptcy Code. This article will also deal with some such kinds which you can file as an individual or as a commercial business owner. Have a look at three of them.
  1. Chapter 7 Bankruptcy:

    When most people declare that they’re filing bankruptcy, this is the type that they refer to. This is also called liquidation bankruptcy where the trustee sells off all the non-exempt assets that are held by the debtor so that the creditors can be paid back to the full extent possible. The portion of the debt which can’t be paid back through liquidation of property is later discharged. Income which is generated after filing bankruptcy is not a part of this process and hence it entirely belongs to the debtor.
  2. Chapter 13 bankruptcy:

    Under Chapter 13 bankruptcy, you are blessed with an alternative repayment stretched through a definite period of time. The trustee will first see your income and tally it against your debts. Taking into account your other necessary expenses, he will decide the amount that you have to repay and the amount which might be discharged. Once this is done, you have to start following the schedule of repayment. You can retain your non-exempt assets.
  3. Chapter 11 bankruptcy:

    Some of the most troubled businesses file Chapter 11 bankruptcy. In this type, the debtor continues to function, maintains his entire ownership over all his assets and tries his level best to work out an alternative repayment plan to repay the creditors.
Hence, if you’re wondering about the kind of bankruptcies, you may consider the above kinds. Make sure you start credit repair soon after filing bankruptcy to restore your credit. Know more about bankruptcy related information here.

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Jimmy Simond is founder of wallstreetsfinancenews.com he share his immense knowledge of finance in this blog. You can follow him on Google+.

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