Since the turn of the century there has been new establishment of bankruptcy laws. The new laws allow the debtors and creditors more flexibility in filing bankruptcy orders, setting up repayment and instituting who can file what type of bankruptcy. As the new laws are more diversified, not every type of bankruptcy is ideal for every debtor and it is crucial that you find the right type of bankruptcy when filing, so you can get the most.
I will show the 3 common chapters:
Chapter 7 bankruptcy is the most common process as it can be filed by individuals or businesses. This type of bankruptcy allows the debts to be wipe clean with little or no repayment.
Under this type of bankruptcy one will see that he can have some possessions exempted from selling and everything not exempted is sold to repay debts.
Once the bankruptcy is approved the persons debts filed under the bankruptcy are cleared.
Chapter 11 bankruptcy is similar to Chapter 7 as it can be filed by both business and individuals. However, this chapter is more skewed to businesses, though.
This type of bankruptcy is best for those with a lot of assets and a lot of debt. It is a repayment plan that allows a person or business to repay debts in a way they can afford while also keeping all their assets.
Usually this is filed by a business because during the bankruptcy process the business can still run their business.
Chapter 13 is another repayment plan for individuals only. Under this chapter a person get to keep their properties while repaying their debts and avoiding common collection methods.
The bankruptcy laws protect a person or business from the harassment of the creditors. Once bankruptcy is filed creditors must stop all collection processes. Creditors cannot file court charges, send letters to debtors nor to do anything that may harass the debtor.
So which is the best chapter for you? The answer is: It depends. You have to consider your assets and debts. In the end, the debtor ought to look at clearing your debts without losing all your current possessions. In order to best do this you need to look at what property you own that is exempt and if you have any property that is not exempt.
In conclusion, one should consider Bankruptcy as the last resort. It is intended to be a way to assist you get back on track. Do not think that you can get away with Chapter 7 because the debtor can keep some of their possessions. New laws have prevented a number of people from filing Chapter 7 when they can afford to repay debts.