Are you thinking to file for bankruptcy? If yes, then you need to know about all the alternatives that are available for you. There are several benefits to file bankruptcy for many people where as for the others, this may seem to be their last option. If you have already mounted up huge amount of debt and the creditors are calling you repeatedly for the debt payments, then what are you planning to do in such a situation? You should make it a point to find out what you can do to eliminate debts soon. Read on to know about the different bankruptcy types and when you may file for it.
Chapter 7 bankruptcy manages the liquidation process. Liquidation is when an individual’s or a company’s possessions are dissolved and can be compulsory. When any business files for Chapter 7 bankruptcy, a trustee is hired to overlook the liquidation method. The trustee sells the debtor’s assets and continues to sell the assets for paying off the creditors. You need to pass the means test so that you may be able to qualify for this kind of bankruptcy. When any individual files for Chapter 7 bankruptcy, he/she can keep the property that is exempted from liquidation. Certain debts that are not eligible as allowable exemptions, consist of home mortgage, student loans and child support.
Chapter 9 bankruptcy offers same kind of security to the governmental agencies like the municipalities, tax districts, cities, counties, towns, school districts and villages. In case a municipality is not able to pay off its outstanding debts, some steps are taken against them like increasing the tax.This kind of bankruptcy is available only to a “political subdivision of the state.” The agency may put forward a repayment plan to the bankruptcy court in their area. The agency needs to pass on the plan before it actually becomes effective. You need to know that this kind of bankruptcy protects the assets of the agencies since there aren’t any provision for disbursement of the assets or proceeds from the assets.
Chapter 11 bankruptcy is generally used by the corporations, business owners or partnerships so that they may be able to reorganize their own business. The restructure enables an entity or a business to carry on with the practices while establishing a structured payment plan to pay off the present debts as well as the creditors. You have 120 days time for filing a repayment plan under the bankruptcy petition. The court may decrease or increase the time period depending upon the status of the individual status. The extensions cannot go beyond the total timing of 18 months. Once this period gets over, the creditor may file for a competing plan.
In a Chapter 13 bankruptcy, you have a repayment plan that enables you to reduce the outstanding debts. The repayment plan explains how you will be able to pay off all the debts. You do not need to have any official form for this plan, however there are many courts that have their forms. You must repay some debts entirely. These debts are also called priority debts. You need to know that these debts include alimony, employees salary, support for the child and certain tax obligations. Besides this, the repayment plan should include the payments that you are going to make on secured debts such as car or mortgage loan on a daily basis.
These are some different types of bankruptcy that will enable you to know when and how you may file for them.