Bankruptcy Information

Stop! Before you think that all is lost and that you don't have a chance, take a deep breath and keep reading. If it is difficult for you to pay your bills and make ends meet, bankruptcy may be a solution for you.

To some people, bankruptcy sounds so horrible and it is something to be avoided at all costs. The truth is that bankruptcy was created by our government to give people like you (if you qualify) a fresh start by eliminating some debts and/or allowing more time to pay other debts.

There are five types of bankruptcy under Title 11 of the United States Code:

    Chapter 7 - Liquidation (for individuals and businesses)

    Chapter 9 - Adjustment Of Debts Of A Municipality

    Chapter 11 - Reorganization (for businesses)

    Chapter 12 - Adjustment Of Debts Of A Family Farmer With Regular Annual Income

    Chapter 13 - Adjustment Of Debts Of An Individual With Regular Income (for individuals)

However, this site deals only with Chapter 7 and Chapter 13 because they are for individuals' personal bankruptcy.

Chapter 7 bankruptcy is called a liquidation because a debtor's property that is not exempt is sold and the net proceeds are distributed to creditors. This sounds worse that it actually is. In most cases, most, it not all, of a debtor's property is exempt so that the debtor does not lose anything or losses very little. At the end of the bankruptcy, most of a debtor's debts are discharged, meaning that the debtor doesn't have to pay them.

Chapter 13 bankruptcy is commonly known as a debtor's payment plan because the debtor has up to five years to pay certain debts according to a payment plan approved by the bankruptcy court.

Of course the above descriptions are simplified. Bankruptcy is detailed and very technical.

When considering filing bankruptcy, it is important to understand the difference between a Chapter 7 and a Chapter 13. But it also important to realize that a person has to qualify for bankruptcy and that not everyone qualifies. Some people have a difficult time paying their debts and still do not qualify for filing bankruptcy.

Another thing to consider when contemplating bankruptcy is to look at bankruptcy alternatives. Bankruptcy is a big step and there may be other ways to resolve debt problems without using the legal process.

All information on this site is general information and it may or may not be applicable to your situation. For specific information or if you have any questions of any nature whatsoever, talk with a lawyer licensed in your state.