The United States Bankruptcy Code is divided into segments known as “Chapters.” Each chapter is dedicated to specific sections of the code. The chapters are divided by the type of bankruptcy being filed. Large, complex business organizations and corporations seeking protection from the court will file Chapter 11 bankruptcy. Individuals can file Chapter 7 or Chapter 13 personal bankruptcy. Chapter 12 is for family farmers and is similar to Chapter 13 bankruptcy.
Chapter 7 is the easiest and quickest form of bankruptcy. In as little as three to six months, your qualifying debt can be eliminated, legally removing your obligation to pay on that debt. This type of bankruptcy discharges your unsecured debt, like credit cards, medical debt, and personal loans. Chapter 7 is considered an elimination bankruptcy. If you have assets not covered by exemptions, they may be seized and sold to satisfy your creditors to some degree. Most people filing Chapter 7 will not lose any of their assets due to the exemption laws.
Chapter 13 is for those filers that have secured debt that they would like to keep. Consumers that have fallen behind in their home payments and worried they are about to lose their home to foreclosure. When you file Chapter 13 bankruptcy, the court allows you to work out a plan to pay the arrears. The plan will last three to five years depending on your income and payback amounts. When your bankruptcy is complete, any unsecured debt will be eliminated. If you wish to keep your secured assets, you must continue to make the payments.
Chapter 11, bankruptcy involves reorganizing business affairs, debts, and assets of a debtor. When businesses are in trouble financially, filing Chapter 11 gives them time to restructure their debts and get a fresh start.
If you would like to know what type of bankruptcy is right for you, contact a Fort Worth bankruptcy attorney today to find out how you can get financial relief.