Common Bankruptcy Chapters
Bankruptcy is a process in which individuals or businesses who are in financial trouble can eliminate or repay some or all of their debts, all while under the protection of the federal bankruptcy court. The most common options include:
- Chapter 7 Bankruptcy – the simplest form of bankruptcy, sometimes called a straight liquidation. It is available to both individuals and businesses. A bankruptcy trustee is appointed to sell (“liquidate”) all non-exempt property to pay back debt. Certain property is protected for individuals (also called “exempt”) under state law. A Chapter 7 business bankruptcy requires the business to cease operations.
- Chapter 11 Bankruptcy – a form of financial reorganization most commonly used by businesses, but it is also available to individuals in limited circumstances. Chapter 11 bankruptcy gives the individual or business an opportunity to restructure finances, and unlike Chapter 7 bankruptcy, allows a company to stay in business.
- Chapter 13 Bankruptcy – a court-approved repayment plan available to consumers, who are allowed to keep their property, provided they pay all or a portion of their debts over a period of three to five years.
Determining which chapter of bankruptcy is the most appropriate for you depends on the facts of your case. Contact Us today for a free consultation to let us help you get out of debt today!