Chapter 7 is the type with which you are most familiar. This requires the discharge of the vast majority of debts and takes approximately three months to complete. During the application procedure, you will reveal your recent financial history, your debts, and the property you own. You typically emerge from this situation with the majority of your possessions, including your residence, vehicle, etc. Typically, luxury items, such as vacation real estate, must be sold to assist with debt repayment.
The purpose of Chapters 12 and 13 is to assist individuals organize their finances. Chapter 12 is designed particularly for family farm owners, whereas chapter 13 is available to everyone, including farmers, sole proprietors, and independent contractors, but not corporations or LLCs.
This plan allows you to file essentially the same documentation disclosing your financial activity and other details, but there are significant differences elsewhere. It will require you to create a three- to five-year repayment plan for the majority of your debt. Child support arrears must be paid in full, and unsecured debt will be repaid with at least 1% of the total amount, which will be determined during the planning stage.
Compared to the chapter 7 option described previously, this option incurs significantly higher legal fees.
10% to 15% of those who file for chapter 7 are advised by a judge to register instead for chapter 13 because they have sufficient income to support a chapter 13 plan.
All of this information on the different types of bankruptcy that can be filed can be very overwhelming, but the most important thing to remember is that you are taking control of your financial situation, which is crucial in order to progress forward.
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