There are six distinct chapters of bankruptcy:
This form of bankruptcy is also referred to as ""liquidation"" or ""straight"" bankruptcy. The majority of unsecured debts (credit cards, personal loans, overdrafts, medical and dental expenses) will be discharged, but certain other debts will remain. In exchange for this debt cancellation, you must relinquish certain categories of property. The majority of individuals file for Chapter 7 bankruptcy, but opt for other options if they have debts that would not be discharged or if they would lose property as a result.
This form of bankruptcy is referred to as ""repayment"" bankruptcy. In exchange for retaining all of your property, you will be required to repay a portion of your debts. People who do not qualify for Chapter 7 or who want to use federal laws to repay debts such as past-due mortgage and car loan payments over time in order to save their home or vehicle are the most common Chapter 13 filers. Chapter 13 payment arrangements can last between three and five years, depending on your household's income, assets, and debts.
Chapter 11 Bankruptcy: Formerly reserved for large corporations, Chapter 11 is now utilized by consumers who would otherwise file for Chapter 13 bankruptcy but do not qualify due to the amount of debt they owe. Chapter 11 is extremely complex and expensive, but it can help if your debts exceed the Chapter 13 limits.
Similar to Chapter 13, Chapter 12 bankruptcy is designated for family farmers.
Municipalities and government entities that need to declare bankruptcy use Chapter 9 bankruptcy.
The purpose of Chapter 15 is to provide effective mechanisms for coping with parties and assets located in multiple countries.
As can be seen, the majority of people petition for bankruptcy under Chapter 7 or Chapter 13. The mechanisms for managing these types of cases are well-defined, and most seasoned bankruptcy attorneys have a firm grasp on both.
When deciding which type of case to file, it is essential to consult with an attorney who can provide you with sufficient information about how you would be affected. Do not hire a lawyer who pushes you into one type of bankruptcy or another without thoroughly explaining all of your options.
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