Which Form of Bankruptcy is Better for My Situation?

There are a variety of different types of bankruptcy. For the purpose of simplicity, we are going to use the term bankruptcy to refer to any situation in which a person is unable to pay their debt obligations in full. As such bankruptcy will commonly be used when describing situations that are similar but differ in one or more ways. There can be differences in the type of bankruptcy that a person may choose. These can include liquidation, reorganization, and reinstatement. Understanding the different types of bankruptcy will help you choose the best method for you.

bankruptcy forms

Chapter 7 (Liquidation)

A Chapter 7 Bankruptcy is the most common and traditionally what most individuals believe to be a bankruptcy filing. In Chapter 7, most debts are immediately discharged within a few months of filing bankruptcy. Liquidation bankruptcy is one in which the assets of a person are sold and the money divided amongst the creditors. The most common way that this type of bankruptcy occurs is through a court decision. When a person has many debts that they are unable to pay, they may feel that they need to liquidate some of their assets in order to meet these financial obligations. Once a court decides that liquidation is the best course of action then it is the law.

The Court does restrict the number of assets an individual may protect before being required to turn over such unprotected assets to the Court. An experienced bankruptcy attorney at our firm will carefully review your assets to ensure that this does not happen without your consent prior to filing the bankruptcy petition.

Many people think that filing for a Chapter 7 bankruptcy automatically grants them a fresh start. In some cases, however, Chapter 7 bankruptcies do not actually give a debtor an immediate fresh start. First, a chapter seven bankruptcy allows you to pay off debts in three to five years. After paying off your debts, you then have the ability to start over with no new debts. This means that you will have to work out payment plans with your creditors, but your credit report will show payments made to all creditors.

Chapter 13 (Reorganization)

A Chapter 13 Bankruptcy is an option that may be available to someone with a large amount of debt is to request that repayment be made in installments. This can work in a variety of different ways. The person could choose to make regular payments, sell some assets, or even take out a loan. There is no set amount that can be paid in an installment and the amount will be based on each individual case.

A reorganization bankruptcy option involves the reorganization of an individual’s current debt obligations into one payment. This can be done in either a lump sum or a monthly manner. The goal is to pay off the debts as quickly as possible while still being able to meet all of your basic necessities.

Chapter 13 bankruptcy repayment plan cannot prevent foreclosure. If you are facing foreclosure, it is best to consult with an experienced foreclosure lawyer to see if you are eligible for a loan modification. If you qualify, your lender may be able to negotiate a payment arrangement that will prevent foreclosure. Your lawyer can also inform you of the rights available to you under the law. By learning about the process of filing chapter 13 bankruptcy, you will be better informed to avoid foreclosure.

Do I Need to Hire a Bankruptcy Attorney?

Each type of bankruptcy is designed for a different purpose. Knowing this will allow a person to make an educated decision about what they need to do. If a person is unable to come to a conclusion as to which type of bankruptcy is right for them, they may wish to seek out the advice of an experienced bankruptcy lawyer. They will be able to provide the answers that they need to help them determine which option is best for them.

At Hoskins, Turco, Lloyd & Lloyd, we understand how complicated the process of considering bankruptcy can be. Don’t wait any longer than necessary. Save yourself a trip to our office by scheduling a free virtual consultation. Simply contact us online or call us at (866) 460-1990 to privately discuss your case right over the phone or in a secure virtual meeting. 

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