Things to Know About Filing for Bankruptcy

There are a number of different types of bankruptcy in the world today. Depending on the condition and the situation, they are labeled. Also, the bankruptcies are differentiated depending on the person who filed them; whether it was an individual or if it was filed by an organization. Hence, this means that you should be aware of the different kinds of bankruptcy before you go ahead and feel that it’s the right time for filing for bankruptcy. Sometimes, your financial situation might not be adequately bad enough to claim for bankruptcy and there might be another way out of it.

The first type is when someone is filing for Chapter 7 bankruptcy. In this bankruptcy, all non exempt assets held by the debtor are sold off and the money generated can be used to repay the debt as much as possible. The income generated after the filing of bankruptcy can be retained by the debtor and is not calculated to be under the bankruptcy. However, it is not possible to conduct business operations once a Chapter 7 bankruptcy has been filed. This is the kind of bankruptcy that people talk about when they are saying that they are going to file for bankruptcy.

The second type is when companies are filing for Chapter 11 bankruptcy which is often filed by businesses that are running in loss or are in trouble. It is a pretty complicated form of bankruptcy. In Chapter 11 bankruptcy, the debtor continues to run the business, maintain his assets and chalk a plan to reorganize and pay off the debts. It is mandatory for the debtor to come up with a plan within 120 days of filing the bankruptcy, beyond which the creditors have the liberty to make a plan of their own. The Chapter 13 bankruptcy type is similar to Chapter 11, except that it is for the individuals. Chapter 11 bankruptcy is also known as filing for corporate bankruptcy, which is often used interchangeably.

With the current crisis prevailing in the economy, many companies are filing for bankruptcy. Hence, it is not uncommon to see some big corporate names filing for bankruptcy online and openly admitting to having a financial crisis. Off late, bigwigs like General Motors and many American based financial institutions like Lehman Brothers have filed for bankruptcy due to a number of reasons. One cannot judge the situation of finances of a privately held company but it is entirely possible to determine the problems that are plaguing the publicly traded firms and hence, observe how the company gradually ended up in a bankrupt situation.

The last type of bankruptcy is the Chapter 12 bankruptcy where one is filing for personal bankruptcy, which is similar to chapter 5 in some ways. Chapter 12 is designed for farm owners. In this plan, the debtor continues working as usual, and even continues to own the assets that he always had. The only difference is that the debtor has to come up a plan to systematically repay the creditors.

Tags: filing for bankruptcy online, filing for chapter 7 bankruptcy, filing for personal bankruptcy, filing for corporate bankruptcy

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