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What are the different types of bankruptcy?

On Behalf of | Oct 4, 2022 | Bankruptcy

California individuals and businesses have options when struggling with debt. Bankruptcy is often the best for a financial refresh.

Filing for bankruptcy

Filing for bankruptcy is a decision that should not come easily. It’s important to first research your options if you have massive debt. If you are unable to reach a solution to pay off your debts through other measures, bankruptcy might be the easiest way to do it. There are different types of bankruptcy, so you should determine which is most appropriate for you.

Six different types of bankruptcy

Chapter 7 bankruptcy is the most common and allows individuals to settle their debts with creditors. A bankruptcy trustee oversees the liquidation process involving the person’s assets. Non-exempt assets are sold and the proceeds go to creditors to pay back secured debt. Unsecured debts like credit card bills are discharged.

Chapter 9 bankruptcy is filed by municipalities. It allows a town or city reorganize debts.

Chapter 13 bankruptcy is appropriate if you can afford to pay your debts but need more time. It gives you three to five years to pay back secured debts and a portion of unsecured debts and allows you to keep your assets.

When businesses have financial trouble and need to reorganize, Chapter 11 bankruptcy is a good solution. A company can remain open and continue business operations while paying off debts.

Chapter 12 bankruptcy allows farmers and fishermen to pay back their debts without having to worry about losing their assets or foreclosing on property.

With Chapter 15 bankruptcy, foreign debtors have access to bankruptcy courts in the United States so they can reorganize their debts and liquidate assets.

Bankruptcy is often referred to as a fresh start for your finances. It should be considered when other options to satisfy debt have been exhausted.