If you are burdened by debt and are looking for a fresh start, there are several different types of bankruptcy that could help you accomplish your goals. There are a number of factors that could help determine whether a Chapter 7, Chapter 11 or Chapter 13 bankruptcy would be in your best interest. First, it is important to understand the difference between these three types of bankruptcies.
Understanding Bankruptcy Filings
Chapter 7: This type of bankruptcy is best for debtors who have a number of unsecured debts such as credit cards and personal loans. Chapter 7 bankruptcy provides for liquidation of the debtor’s assets such as property. There is no repayment plan in a Chapter 7. This is also the type of bankruptcy that can help erase most debt, with a few notable exceptions. When you file for Chapter 7 bankruptcy, you put an end to calls from collectors right away. Creditors also cannot garnish wages, file a lawsuit or demand payment in any way from you until the bankruptcy case is resolved.
Chapter 11: This is most often used by businesses although it could help small business owners and individuals as well. A Chapter 11 bankruptcy essentially allows you to restructure your debt and make payments over time. It allows businesses to come up with a plan and continue to operate while paying creditors over a period of time. The process begins with the debtor filing a petition with bankruptcy court and then coming up with a reorganization and repayment plan. Businesses pay secured creditors such as banks first and unsecured creditors are lumped into a separate category.
Chapter 13: A Chapter 13 bankruptcy helps those with regular income to develop a plan to repay all or part of their debts. Debtors, under this chapter, can propose a repayment plan to make payments in installments over three to five years. The biggest difference between Chapter 11 and Chapter 13 is that debt under a Chapter 13 must be repaid within five years, while debtors under a Chapter 11 have more time.
Which One is Best for You?
Which type of bankruptcy you choose will depend on what your needs and circumstances are. If you have no steady or sufficient income stream and are staring at a mountain of debt, Chapter 7 is probably your best bet. It tends to be the quickest option if you wish to erase debt. If you have some resources to repay your debt as a business Chapter 11 is best. Both Chapter 13 and Chapter 11 will permit you to keep some assets, which you will likely need to liquidate under Chapter 7. Chapter 11 and 13 may offer more assistance in terms of car loans, mortgages and other varieties of unsecured debt. Chapter 13 also affords you the opportunity to catch up on repaying dent over a specific period of time.
Consult an Experienced Bankruptcy Lawyer
If you are not sure which type of bankruptcy suits your situation best, it would be in your best interest to contact an experienced Pinellas County Bankruptcy Lawyer who can help evaluate your specific situation and provide the best possible outcome.