If you are in over your head with debt and can’t see yourself finding your way out without help, it might be time to consider filing for bankruptcy. There’s nothing shameful or wrong with filing bankruptcy — it’s there for those who need it, and plenty of people take advantage of this opportunity to start anew with their finances.
However, you might be confused over the sheer number of options you have before you as you seek help with filing bankruptcy. There are several different types of bankruptcy, and one person’s ideal type of bankruptcy might not necessarily be yours.
Not sure which type of bankruptcy help would be best for your unique financial needs? Here’s a quick rundown of the difference between Chapter 7 11 and 13 bankruptcy to help you make your decision:
Chapter 7 bankruptcy
The typical Chapter 7 bankruptcy timeline allows individuals to discharge all their applicable debt in exchange for some of their property and assets. This is the most common form of bankruptcy. While it allows you to get rid of all your debt and start over completely, it will also stay on your credit report for 10 years after you file bankruptcy, meaning it could be difficult to get approved for a car or house purchase in the first few years after your bankruptcy.
Chapter 11 bankruptcy
Chapter 11 bankruptcy is normally geared toward businesses, corporations and other organizations involving more than one individual. Individuals can file Chapter 11 bankruptcy, but only if they fit a specific set of criteria. This type of bankruptcy involves a restructuring of debt and creating a repayment plan that both the debtor and creditors agree to. Unlike a Chapter 13 bankruptcy, there is no limit on the amount of debt that can be involved in a Chapter 11 bankruptcy.
Chapter 13 bankruptcy
Chapter 13 bankruptcy helps people pay back their debts by setting up a repayment plan that one pays back over a three- to five-year period. Some people choose this type of bankruptcy because it allows the filer to hold onto all their property, and because it allows the filer to fulfill his or her moral responsibility to pay back creditors.
Have any other questions related to seeking out bankruptcy help for your debt? Feel free to ask us anything in the comments below. Read more blogs like this.
