Chapters of Bankruptcy & which one helps you

Since the new century there has been new establishment of bankruptcy laws. These different types offer several ways in how the bankruptcy will work for them, how debts will be cleared|settling the debts and instituting who can file what type of bankruptcy. Not every type of bankruptcy is applicable for every debtor and it is of utmost importance that you choose the right type of bankruptcy when filing, so you can benefit the most.

I will show the 3 most common chapters:

Chapter 7 Bankruptcy

Chapter 7 bankruptcy can be filed by individuals or businesses. This type of bankruptcy wipes the debts clean with little or no repayment.

Under this type of bankruptcy one will see that he can have some possessions exempted from selling and everything not exempted is sold to pay debts.

Once the bankruptcy is approved the persons debts filed under the bankruptcy are cleared.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is similar to Chapter 7 as it can be filed by both business and individuals. It is usually reserved for businesses, though.

This type of bankruptcy is suitable for those with a lot of assets and a lot of debt. It is a repayment plan that allows a person or business to repay debts in a way they can afford while also keeping all their assets.

Under this chapter, businesses can still remain operational, which is a very good option for many.

Chapter 13 Bankruptcy

Chapter 13 is another repayment plan for individuals only. It allows a person to keep their properties while repaying their debts and keeping away from common collection methods.

Any type of bankruptcy protect a person or business from the creditors. Once bankruptcy is filed creditors must stop all collection processes. Creditors cannot file court charges, send letters to debtors nor to do anything that may harass the debtor.

So which is the best solution? The answer is: It depends. You have to consider your assets and debts. In the end, you should be look at clearing your debts without losing all your current assets. In order to best do this you need to look at what property you own that is exempt and if you have any property that is not exempt.

Bankruptcy should not be considered as an avenue to escape from debt. It is intended to be a way to assist you restart your life again. It is wrong to just decide on Chapter 7 because debts are completely eliminated. The revised laws have imposed rulings that stops many people from filing Chapter 7 because they have the ability to repay debts.