What is Bankruptcy?
Bankruptcy is a legal operation that serves to offer individuals and businesses a new beginning, that can no longer repay their outstanding debt with the protection of the federal bankruptcy court. There are two types of bankruptcies. They are liguidation and reorganization.
What is a Chapter 7 bankruptcy?
Chapter 7 is the quickest form of filing for debt relief. This type of bankruptcy wipes out most debts within months of filing. You must pass a “means test” to qualify for a Chapter 7 filing. This “means test” examines your financial records that include income, expenses, secured and unsecured debt. Qualification is based on income limits that vary by state.
What is a Chapter 13 bankruptcy?
Chapter 13 allows one with regular income to develop a plan to repay all or part of their debts. With a proposed repayment plan to make installments to creditors over three to five years. The debtor is can be relieved from an obligation to pay certain debt like credit cards and medical bills.
What is a Chapter 11?
Chapter 11 provides a form of reorganization for a company to restructure their debt. Given the organization a chance for a fresh start. Chapter 11 can take between a few months to two years. It is more effective for high debt/high asset individuals and businesses. With this chapter of the bankruptcy code, it provides for reorganization to keep the business with heavy debt to pay creditors overtime
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