Chapter 7 Insolvency Details
Chapter 7 of the United States Bankruptcy Code regulates the situation in which the only viable option is to liquidate all non-exempt assets to repay creditors. Chapter 7 is typically chosen when the current income is insufficient (or nonexistent) to repay the creditors and the current assets are limited. The bankruptcy court may then decide on the chapter 7 procedure, in which your assets are liquidated and your creditors are repaid. Typically, the remaining debt is canceled by the court. The advantage of this procedure is that it is relatively faster than the alternatives, and a definitive settlement can be reached within a few months. And the greatest disadvantage is that you will be unable to save your assets.
Chapter 13 Insolvency Details
This code permits private individuals to restructure their debts in consultation with their creditors and a court-appointed trustee. The repayment terms are modified so that the debt can be repaid within the stipulated timeframe of three to five years. The disadvantage of this procedure is that it takes longer, but the benefit is that the individual is able to save the majority of his assets after surviving it.
Chapter 11 Insolvency Details
The procedure outlined in chapter 11 allows a business to reorganize itself and restructure its loan with the consent of its creditors over a specified period of time. In addition to being a lengthy process, filing for bankruptcy under chapter 11 is more expensive.
The decision to file for bankruptcy should be made only after all other options have been exhausted. It is highly recommended that you retain a bankruptcy attorney who will not only advise you on how to file for bankruptcy but also on which chapter you should file under.
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