When most people think of bankruptcy, they think of businesses going under. However, personal bankruptcy is quite common as well. Over 1 million people file for bankruptcy every year in the United States. Bankruptcy is a legal process that can provide relief to those who are struggling with debt. There are three types of personal bankruptcies: Chapter 7, Chapter 11, and Chapter 13. In this blog post, we will discuss the differences between these three types of bankruptcies and help you decide which one is right for you.
Chapter 7:
Chapter 7 bankruptcy, also known as a straight or liquidation bankruptcy, is a type of bankruptcy that can clear away many types of unsecured debts. If you’re far behind on your bills and don’t have the means to afford monthly payments and living expenses, filing Chapter 7 bankruptcy could be the last resort to help you reset your finances. However, you may have to give up some of your possessions, and it will have a long-lasting negative impact on your creditworthiness.
Chapter 11:
Chapter 11 bankruptcy is also known as corporate bankruptcy. It is filed by businesses that want to reorganize their debts and keep their business running. In this type of bankruptcy, the business’s assets are used to pay off its creditors. The business may also be required to reduce its operations or sell some of its assets to repay its debts.
Chapter 13:
Chapter 13 bankruptcy is also known as a reorganization bankruptcy. This type of bankruptcy is available to individuals with a regular income. In Chapter 13 bankruptcies, the debtor proposes a repayment plan to their creditors to repay all or part of their debt. The repayment plan must be approved by the court and typically lasts three to five years. After the repayment period is over, any remaining debt is discharged.
Chapter 20:
Chapter 20 bankruptcies are a combination of Chapter 11 and Chapter 13 bankruptcies. This type of bankruptcy is filed by businesses who want to reorganize their debts and Individuals who want to repay their creditors over time. In this type of bankruptcy, businesses’ assets are used to pay off their creditors and individuals make payments to a trustee who then distributes the payments to the creditors.
Filing for personal bankruptcy can be a difficult decision to make. However, it is important to remember that bankruptcy is not the end of the world. Bankruptcy can provide you with a fresh start and help you get back on your feet financially. If you are struggling with debt, we encourage you to speak with a bankruptcy attorney to discuss your options.
The question we often get is, Can I sell my house while in bankruptcy? The answer is yes! We can work with your attorney and the courts to help you get rid of your property before, during, and or after your bankruptcy. There’s a little more paperwork involved but it’s an easy process for us since we’ve bought many through the bankruptcy courts in Johnson, Jackson, Wyandotte, Cass, Clay, and Platte counties.
We hope this blog post has provided you with some helpful information about personal bankruptcy. If you have any questions, please feel free to contact us. We would be more than happy to answer any of your questions or concerns. Thank you for reading!
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. If you need legal advice, please contact an attorney.
