If you are facing the threat of bankruptcy, you want to know everything you can about the process. You probably have a lot of questions in this frightening stage. Which type of bankruptcy should I file? How do I know what is most beneficial for me? Asking these questions now, in preparation, demonstrates maturity. When you prepare yourself for this situation by learning as much as you can, you ensure the process will be smoother.
What You Need To Know
Chapter 7 is a popular form of liquidation bankruptcy. In fact, it’s the most popular form. It refers to Chapter 7, Title 11, of the U.S. Bankruptcy Code. Understanding ‘liquidation’ and the difference between this form of bankruptcy and ‘reorganization’ is key.
Chapter 11 and Chapter 13 are forms of reorganization bankruptcy, meaning the debtor restructures their debt and works with the court on how their remaining assets are to be handled.
Via Chapter 7, an individual or business can liquidate, which means all assets are sold off in order to pay back creditors. This is the most common form of bankruptcy for individuals. However, many debts cannot be dealt with through the bankruptcy courts. If you are trying to shirk the burdens of alimony, child support, or student loans (just to name a few), no form of bankruptcy can be of service to you.
Before you go to court, continue research. We offer a wealth of information here on the blog on Chapter 7 and other forms of bankruptcy. Preparing now is the best thing you can do for yourself.