Many people think of bankruptcy as a means of legally discharging your debts. And while this is true for a Chapter 7 bankruptcy, you might not know that there are two other common types of bankruptcy that you should know about.
Understanding the differences between Chapter 7, Chapter 11 and Chapter 13 bankruptcy is important to figuring out which type is right for you, and where you should go for the right type of bankruptcy help.
Here is a quick guide to help you distinguish between the three most common types of bankruptcy:
What is Chapter 7 bankruptcy?: In a Chapter 7 bankruptcy, an individual is able to liquidate all their relevant debts and start completely anew. In exchange for this, the individual filing must normally give up their non-essential assets, and a Chapter 7 bankruptcy stays on one’s credit report for 10 years after it’s filed.
What is Chapter 11 bankruptcy?: Chapter 11 bankruptcy, which is typically filed by corporations, businesses and other organizations, effectively creates a plan for debt reorganization and restructuring that will help the debtor manage their payments.
What is Chapter 13 bankruptcy?: Like Chapter 11, a Chapter 13 bankruptcy allows an individual to restructure of his or her debts into a three- to five-year repayment plan. Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcies allow the debtor to hold on to their material assets.
If you think any of these options may be the right one for you, speak to a bankruptcy attorney in your area to find out more about them. More like this article. To learn more, read this.