Bankruptcy is one of these very special and sensitive cases. If we will observe, bankruptcy does not normally involve sending one to jail; at its worst, it only takes away one’s assets as his/her payment to his/her creditors, yet it’s very sensitive and emotionally-charging case, especially to the debtor – the one who may lose his/her assets.
It is important you get the best help if your find yourself under a bankruptcy case. The best bankruptcy law firm we know is KT-Bankruptcy Lawyer. They highly specialize in the different Chapters offered by the US Bankruptcy law, and they can help you with other bankruptcy matters as well!
Now, it’s time to learn a thing or two about bankruptcy. We will briefly cover the Chapters of bankruptcy, so you know which one to file. And yes, bankruptcy is not one horrifying case of losing assets and so – you have options, thanks to these Chapters! So, let’s know about them right away!
According to the book, The Bankruptcy Book: The Truth About Ending Your Bill Problems and Getting Back The Good Credit You Deserve by Christopher McAvoy (2010), there are four (4) bankruptcy types. They are identified as follows:
1) Chapter 7
Chapter 7 is also called “straight” or “liquidation” bankruptcy because it’s the easiest among the other Chapters – and “liquidation” because this Chapter is mainly about liquidating your assets, and paying the proceeds to your creditors.
Chapter 7 is the typical stereotype of any bankruptcy cases – even though, again, you actually have options. Because this is mainly about liquidation, or “losing” of the assets, Chapter 7 is also the most avoided.
However, Chapter 7 isn’t as bad as you think. Chapter 7, as well with different bankruptcy Chapters, won’t necessarily mean you’ll automatically lose your assets. This is called the “automatic stay” – where creditors aren’t allowed to chase you off, at least temporarily.
And although Chapter 7 is mainly about liquidation, if you have cash reserves, you can use them as payment, so you have the chance to save or spare your other assets.
All in all, Chapter 7 isn’t about immediate liquidation. As with any other case, your situation would be assess first before deciding what to do with your assets.
KT-Bankruptcy Firm can help you a lot if you filed for a Chapter 7 bankruptcy case. Learn more here.
Now, there are other alternatives to Chapter 7. Read more below to find out and see which most suits your case.
2) Chapter 11
If you are running a big business – usually registered as a partnership or corporation – or if you have substantial debts, you can file for Chapter 11 bankruptcy case.
Chapter 11 gives you the chance to remain in power over your business or assets. Again, the same concept of automatic stay applies here – creditors can’t immediately take your assets right away.
Chapter 11 will give you the chance to reorganize your assets, so you can pay off your debts through business restructuring and reorganizing your payment plan (often simply called “reorganizational plan”).
However, and needless to say, you must stick to your plan and should be able to pay your creditors with that plan. If you failed to stick to your plan and failed to pay your creditors, at worst, they’ll take your assets away as an alternative form of payment.
You can learn more about Chapter 11 bankruptcy case here, and why it’s advantageous on your part.
3) Chapter 12
Chapter 12 is a relatively new bankruptcy case. This Chapter solely focuses on family farmers and fishermen.
The aim of Chapter 12 is to help those in the agricultural or fishing sector for their debts – they play a very crucial part in our society, after all, as they’re the ones providing us a food to eat.
Chapter 12 is really just a variant of Chapter 13 – only with added benefits for anyone in agriculture and fishing.
Just like Chapter 13 (and 11 for that matter), Chapter 12 bankruptcy case gives farmers and fishermen a chance to reorganize their payment plans and assets, so they won’t have to liquidate and lose them.
This also gives them a chance to focus on their commercial activity – farming and fishing – while they fix their debts.
4) Chapter 13
Finally, this bankruptcy is the personal version of Chapter 11. Persons with regular income can set up a payment plan as a substitute for keeping all of their assets.
It is used by anyone who are searching to save a car from repossession or a house from foreclosure. The most known kinds of bankruptcy that is personal for individuals are Chapter 13 and Chapter 7. Approximately 65% of all U.S. consumer files Chapter 7 cases. Corporations and alike file under Chapters 11 or 7.
Consequently, what does it mean when it says, “filing for bankruptcy”? Still, according to the book mentioned above, it is “any type of bankruptcy whatsoever- immediately triggers an injunction against the continuance of any conduct done by any creditor contrary to you or your property; it is also known as the ‘automatic stay,’ and it is a critical element of your bankruptcy case. If you submit a case for Chapter 13 bankruptcy, that injunction extends to any person who has the obligation to repay your debts.”
Now that we have shown you bits about the types of bankruptcy that you may encounter, we hope that this may give you a brief thought about what to file and about the person you may want to reach out to, such as the KT-Lawyers who are expert at bankruptcy cases, with records of wins which shows how effective they are as your lawyer.
Finally, this article is for educational purposes and is made to present you bits of bankruptcy, but we advise that you refer such matters or concerns to the experts and not just base on self-gained knowledge about the case.