Chapter 7 bankruptcy, also known as liquidation, is the most prevalent form of bankruptcy for individuals, especially in regards to credit card debt and medical expenses. It can be lodged by individuals and businesses who pass a test assessing the debtor's annual income, with qualifying parties earning less than the state average. A """"trustee"""" is appointed by the court in a Chapter 7 bankruptcy to take possession of nonexempt assets and liquidate them, with the proceeds applied to the secured portion of the debt. The debtor will be permitted to retain exempted assets.
Chapter 13 bankruptcy is an option for individuals who do not qualify for Chapter 7 bankruptcy. This form of proceeding requires the debtor to adhere to a court-approved repayment plan over a specified time period. In contrast to Chapter 7, Chapter 13 allows the debtor to retain ownership of their assets as long as payments are made in accordance with the approved plan. Additionally, they will be shielded from any related litigation, tax garnishments, repossessions, and foreclosures. This will ensure that the debtor is able to maintain their housing, food expenses, and other necessities while repaying their debt on a monthly basis. The repayment of all chapter 13 debt must be completed within five years.
Chapter 11 bankruptcy is almost always utilized by companies seeking to continue operations. Although corporations can also file for Chapter 7 bankruptcy, Chapter 11 allows them to remain in business with the aim of regaining profitability through active reorganization. The company may discharge a portion of its debt while continuing to repay the remainder. Within a few months of filing, debtors may be able to reorganize under Chapter 11.
Discussing your options with a bankruptcy attorney can help you determine which type of proceeding will benefit your financial situation the most. While initial circumstances may dictate that one form of bankruptcy is preferable to another, a professional consultation may disclose other viable options.""
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