What are the different bankruptcy options?
bankruptcy is a legal process that helps individuals or businesses who cannot pay their current debt. Depending on the situation of individuals or enterprises, there are several different options for bankruptcy. The bankruptcy is filed in the Federal Court and a fee must be filed.
Bankruptcy options for personal debt include Chapter 7, which is the most common type of bankruptcy. This includes the disposal of assets. After the individual proves evidence of debt, income and assets, the bankruptcy court will review the financial records and find out whether the debt ratio to income is high enough to grant bankruptcy.
Some assets can be confiscated by a court, then sold and the money is divided and provided to creditors. The remaining debt would be excluded by the court. Some types of debt are forbidden to rule out by law, for example that the support of children, federal student loans or taxes owned by internal income services are not excluded.
Some assets are protected under state and federal law and considered as a free timefor example, pension accounts such as 401 (K) are protected from the liquidated in chapter 7. Although exceptions may vary, they usually include a car, primary home, clothing and furniture.
Other personal bankruptcy options include Chapter 13. This differs from Chapter 7 because it requires a repayment percentage of debt and is considered to be a reorganization of debt. As in Chapter 7, it is necessary to provide all financial records and reviewed. Individuals who want to keep all their assets can decide on this possibility.
In bankruptcy in Chapter 13, the court will decide what percentage of the debt to be paid. This percentage is divided into monthly payments made by bankruptcy administrator, which pays creditors. Individuals who submit chapter 13 usually have a debt for three to five years to repay Bankrotu.
chapter chapter 11 is a similar chapter 7, in the fact that the assets are sold belowNiches and money are divided and provided to creditors. Although individuals may serve bankruptcy in Chapter 11, it is more common for businesses. Businesses may be allowed to continue operation even if they give chapter 11.
Kankruh 12 Chapter 12 is a reorganization bankruptcy that works in the same way as Chapter 11. It is specifically for farm owners and allows the debt and repayment of debt. This option was intended for farmers who were unable to pay their debt but did not want to lose their farm.
bankruptcy usually remains on the debtor's credit report for ten years. However, for some individuals or businesses, bankruptcy administration may be the best choice. Different types of bankruptcy options can provide a new financial start. Regardless of the type of bankruptcy, it is important to learn from past financial errors to prevent repetition.