What Are The Three Types Of Bankruptcy?

By Author: Leonard Simmons
Total Articles: 152
Comment this article

A bankruptcy lawyer in Washington DC can assist you if you are in debt that you cannot pay. This situation can usually be remedied by filing for bankruptcy, but knowing more about the types of bankruptcy under the law will help you to determine which is right for your situation. Chapter 7 bankruptcy, or liquidation, is the most common form of bankruptcy in regard to individuals, particularly in regards to credit card bills and medical expenses. It can be filed for by individuals and businesses that can pass a test which will assess the income of the debtor, with qualifying parties earning below the state average annually. With a Chapter 7 bankruptcy, a party, referred to as a “trustee,” is appointed by the court to take possession of assets which are nonexempt and liquidate them, with the sum being paid towards the secured portion of the debt. The debtor will be able to retain exempted property. Individuals who do not qualify for Chapter 7 bankruptcy may instead consider Chapter 13 bankruptcy. With this type of proceeding, the debtor will follow a court approved plan of repayment of a set period of time. Unlike Chapter ...
... 7, Chapter 13 allows the debtor to retain ownership of their assets, so long as they maintain their payments according to the approved plan. They will be protected from any lawsuits, tax garnishments, repossessions, and foreclosures related to the debt as well. This will ensure that the debtor will be able to maintain their living accommodations, food expenses, and other needs while repaying their debt on what is typically a monthly repayment schedule. All debt filed under chapter 13 must be repaid within five years time at the latest. Chapter 11 bankruptcy is almost always applied towards businesses which wish to continue their operations. While corporations may be able to file for Chapter 7 bankruptcy as well, Chapter 11 allows a company to remain in business with the goal of regaining profitability through active restructuring. The company may discharge a portion of its debt, while repaying the remaining sum. Debtors may be able to recover from Chapter 11 within months of filing. Speaking with a bankruptcy attorney about your options can help you to determine which type of proceedings will best benefit your financial situation. While circumstances may initially dictate that one type of bankruptcy is more viable than another, professional consultation may reveal other options that you may not have originally considered.

Want to learn more about a bankruptcy attorney in Washington DC?

Get more information:

http://www.bolgerlaw.com