There are several types of bankruptcy, each with its own requirements and procedures. The most common types of bankruptcy for individuals and small businesses are:
- Chapter 7: Also known as “liquidation” bankruptcy, Chapter 7 is designed to discharge most unsecured debts (such as credit card debts, medical bills, and personal loans) by selling non-exempt assets to pay off creditors. Most people who file for Chapter 7 are able to keep most or all of their property through exemptions provided by law.
- Chapter 13: Also known as “reorganization” bankruptcy, Chapter 13 allows debtors to keep their property and repay some or all of their debts over a three to five-year period under a court-approved payment plan. Chapter 13 is often used by people who have regular income and can afford to make monthly payments to creditors.
- Chapter 11: Chapter 11 is a type of bankruptcy that is typically used by businesses and large corporations to reorganize their debts and operations. Under Chapter 11, a debtor typically continues to operate its business while repaying creditors over time.
- Chapter 12: Chapter 12 is a type of bankruptcy that is available only to family farmers and fishermen. It is similar to Chapter 13 but provides additional benefits and flexibility for these types of debtors.
It’s important to note that the eligibility and requirements for each type of bankruptcy can vary depending on individual circumstances. It is advisable to consult with a qualified bankruptcy attorney to determine the most appropriate type of bankruptcy for your situation.
If you have any questions about this post or if you’d like to speak with an experienced bankruptcy lawyer about your situation, contact us for a free confidential consultation at (510) 761-6230.