Personal bankruptcy types
You can file either Chapter 7 or Chapter 13 bankruptcy if you have multiple large debts and have made unsuccessful attempts to repay them. These two forms of insolvency are listed below.
7th Chapter
The erasure of some or all of your debts is possible if you file for Chapter 7 bankruptcy. However, you must pass the means exam as it is the most important criterion you must meet in order to file Chapter 7. The debtor's income is less than the median income (for his/her family size) in his/her state, as determined by the means test. Chapter 7 bankruptcy involves the liquidation of assets to repay debts.
o Section 13
You must have a steady income in order to file Chapter 13 bankruptcy. By filing Chapter 13, you can repay some or all of your debts over a period of three to five years. When you have secured debts (such as a car loan) to repay, you can choose Chapter 7. This is the superior option if you wish to retain your assets.
Forms of commercial insolvency
The various business bankruptcy chapters are discussed below.
7th Chapter
When a business files for Chapter 7 bankruptcy, its assets are liquidated to pay off its debts. The bankruptcy court appoints a trustee to oversee the entire procedure.
9th Chapter
When a municipality has enormous debt to repay, it can file Chapter 9 bankruptcy. When a municipality files Chapter 9, the bankruptcy court assists it in reorganizing its debt and protects it from its creditors.
o Section 11
Chapter 11 enables a business to continue operations while repaying its debts under the supervision of a bankruptcy court. However, only large corporations can utilize Chapter 11 due to its high cost.
o Section 13
When a business wants to protect its assets, it can file for Chapter 13 bankruptcy. It is appropriate for sole proprietors and small businesses that can retain non-exempt assets and repay creditors using a repayment plan.
Contacting a bankruptcy attorney is advised if you have exhausted all other options for debt repayment. A counsel can assist you in selecting the most appropriate chapter/type of bankruptcy based on your financial circumstances.
With the assistance of a bankruptcy attorney, you must first file a petition with the court that includes a list of your creditors and the amount owed to each. The bankruptcy court then appoints a trustee after approving your petition. The trustee is responsible for managing the entire proceeding until your debts are repaid or you receive a discharge.""
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