What are the different types of bankruptcy
In this present day and age, thanks to the current economy, an increasing number of people are filing bankruptcy. This may be a frightening time, what you must understand is the fact that gaining more knowledge about this would surely help you in order to make a decision. It is always best that you do not jump in and decide on declaring bankrupty until you come across all the right facts and figures. What you initially do need to consider would be the types of bankruptcy that are out there for you to see which category you fall under.
When people end up declaring that they are filing for bankruptcy, what they really do mean is that they are opting for liquidation bankruptcy or Chapter 7. While this would be sending jitters down your spine, what you do need to understand is that you must get all the facts surrounding this type of bankruptcy before having a nervous breakdown! What this means is that the trustee will sell off all the debtor’s non-exempt assets so that all the debts can be paid off. If there is a certain amount of debt that cannot be paid, this bit is discharged.
While this is one type of bankruptcy, you should note that there are two more types of bankruptcy. Remember that Chapter 7 is usually avoided by companies since it would be impossible to carry on with business since most of the assets will be sold off. Chapter 11 is one of the most complex types of bankruptcy. This is where the debtor (if it is a business) despite filing for bankruptcy still continues to function and will come up with a plan to pay off the creditors. Remember that this is just one of the types of bankruptcy where the debtor keeps all the assets while still functioning.
When consider types of bankruptcy, one should also make a mention of Chapter 12. This is one of those types of bankruptcy that are relevant to farm owners, where they are control of their assets and other equipment while they settle a repayment plan with the creditors. Last but not least, Chapter 13 also falls under types of bankruptcy that deal with individuals. This is where the debtor usually retains the control of all the assets while he or she seeks to pay off the whole range of debts within three to five years. So there you have the different types of bankruptcy that would be relevant to you. While most of the information has been delved into superficially, there are some details that need to be gathered through a more thorough reading of the technical details.
