There are three main types of bankruptcy cases. These are referred to by their chapter number in the Bankruptcy Code.
Chapter 7: This type of bankruptcy is referred to as "Liquidation", and is the most common type. In return for having debts discharged, you must turn over all property except for certain assets considered exempt. The property is sold and proceeds are distributed to those owed in according to priorities established by law. Very often all the property is exempt, nothing is turned over and the creditors receive nothing. The principal advantages of Chapter 7 are that the case is usually completed within six months, generally only one court appearance is required, and you emerge without any future obligations on the discharged debts.
Chapter 11: This type of case is a "Reorganization". It is generally used by businesses, or by individual who do not qualify for other types of bankruptcy because of their substantial debts, and/or assets that would be lost in Chapter 7.
Chapter 13: This type of case is also referred to as a "Reorganization". It is often used to catch up past due mortgage or car loan payments, and can address debts that would not be dischargeable in a chapter 7. A Plan must be proposed to pay all or part of the debts from future income over a period of time ranging from three to five years. Once approved, the matter is settled, even if your creditors were not willing to work with you. If you make the payments as required, you will not have to surrender property to the trustee.
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|The content of this article is provided for informational purposes only. If you need legal assistance with bankruptcy, consult with a bankruptcy Lawyer near you to discuss the details of your case.|