There are four different types of bankruptcy chapters. Each type is designed to address specific needs. As most people are not aware of this, the basic facts can help you to decide which bankruptcy chapter is appropriate for you.
The two most common forms of bankruptcy available to individual consumers are Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. As there is a wide difference between the two, it is wise to not attempt to decide which is best for your particular situation without seeking qualified advice. Depending upon the amount of your debt and your income, a payment plan provided by Chapter 13 bankruptcy can help you to resolve your debts without incurring loss of property. Chapter 7 bankruptcy will cancel many of your outstanding debts, involves liquidating all of your nonexempt assets for the purpose of paying your creditors.
Chapter 11 Bankruptcy is primarily for business owners. The specifics regarding your debt and repayment will remain largely up to your creditors. With Chapter 11 bankruptcy, you have the additional risk of creditors who may not be willing to agree to the terms. At its best, you may be able to continue operating your business while also resolving your debt. As with any form of bankruptcy, it should be seen as the final option if bankruptcy alternatives are not in the best interest of your business.
Although most people are aware of these bankruptcy chapters, fewer are familiar with Chapter 12 bankruptcy. Chapter 12 bankruptcy is designed to help those who own and operate family farms if they encounter serious financial problems. It is unfortunate that so few are aware of Chapter 12 bankruptcy, because its terms can be very helpful to the farmer who is struggling with debt. If he elects to file for Chapter 12 bankruptcy, he will be able to pay his creditors as his income reasonably allows, without being in the position of forfeiting his property or other assets. Chapter 12 bankruptcy is definitely a useful tool for the farmer who sincerely wants to deal with his debt while not risking the loss of his farm.
If your financial difficulties suggest that bankruptcy is the most sensible option for you, you need not be overwhelmed at the process you are facing. As each of these bankruptcy chapters was carefully designed to meet the needs of specific consumers, knowing where you stand with your rights and what will be expected of you is the first step in making dealing with bankruptcy less stressful and much more helpful for you.