The Four Types of Bankruptcy

Mar 12

Recently my brother in law and I were talking about our finances. He’s been unemployed for the past six months. It’s been really hard on him and his wife. He had a great job when he and his wife decided to buy a house, but the economy just doesn’t have work in his field right now. They started paying their mortgage on credit lines in order to make ends meet for a little while longer, but now their debt is getting out of control. He said he’s thinking about filing for bankruptcy in order to wipe his credit slate clean. I wished him the best of luck. It is terrible that he has to do something like that. It’s going to affect his ability to get credit for the rest of his life, but it’s certainly better than having your house foreclose. I started to wonder how bankruptcy works. I found some good information on the different types of bankruptcy on the website for Erin B. Shank. Erin B Shank is a lawyer that helps people through the bankruptcy process all the time. She makes sure that all the court processes and file work is handled correctly so that you can declare bankruptcy and get the best possible outcome from an unfortunate situation.

There are four main types of bankruptcy that people can declare. They are known as chapter 7, chapter 11, chapter 12 and chapter 13. Chapter 7 is the most common form of bankruptcy, and it affects credit card debt.

In order to be eligible for chapter 7 bankruptcy, you have to meet a couple of different criteria. The United States says that anyone filing for bankruptcy under chapter 7 must be a corporation, partnership, individual or a business entity. You can file for bankruptcy no matter how much debt you have. You may also file for bankruptcy if you are solvent or insolvent. You cannot file for bankruptcy if you tried to file less than six months ago but your petition was denied because you failed to follow the court’s orders. This type of bankruptcy exists to give individuals a fresh start. It will extinguish all debts for an individual but not necessarily for a business or corporate entity. Liens are different than debt. Bankruptcy does not extinguish liens for individuals or businesses alike.

If your debt is not primarily wrapped up in credit cards or other forms of credit, you may look to other sorts of bankruptcy that you can file. Chapter 11 is the most common form of bankruptcy that business owners look1 to. This is because it allows them to repay large amounts of debt while still owning and operating their business. They can file for bankruptcy without losing the capital they’ve invested in their business.

The Chapter 13 bankruptcy is called the “wage earner’s bankruptcy”. This form of bankruptcy is most common among people with a regular wage. It helps people refinance their house. They can make payments on a house over a longer amount of time. It is especially helpful if your house is up for foreclosure as it allows you to repay missed payments for up to five years without having to deal with late fees or interest.

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