Types of Bankruptcy

Declaring bankruptcy may sound so easy and tempting considering the fact that the government will give you pardon (or something like that) for your debts, but you have to remember that no one will lend you a hand that quickly because a great amount of money is involved; definitely not the government!

There are different types of bankruptcy to apply for (actually, these types are also called chapters). Depending on what situation you are in, filing for bankruptcy will always provide you financial help.

Do not mistake this financial help for charity though, because the government will conduct a background investigation if you really are in need of this kind of assistance or not. Once the government found out that you are lying in any way to hide your assets, transfer your money to your friends or family, is still employed but declared yourself to be unemployed or intentionally concealed inheritance, business or any source of possible income, things will really go ugly and your chance of having the government on your side to help you will turn the other way around!

The merciful process of filing for bankruptcy is an angel for individuals or companies that no longer have the financial ability to pay for the bills they owe. In order for people in need of financial assistance to survive despite the fact of financial insolvency, the government will offer types of bankruptcy to opt for.  Whether it’s temporary or permanent, the government will always offer a hand to lure someone out of insolvency.

Here are the three (3) types of bankruptcy that is commonly applied for by firms and individuals:

Chapter 7 is the most commonly applied for and is also called “straight bankruptcy”. In this case, the debtor’s assets are sold to pay the creditors. In filing this type of bankruptcy, some of the debts will be eliminated so the original debt will no longer be paid in full as ordered by the government. Because of this scenario, a debtor who files for bankruptcy will face difficulties in applying for a new line of credit in a couple of years after filing.

Chapter 13 is debt restructuring exclusively for individuals. Here, debts are not paid off; instead a payment plan is being set to allow the debtor to pay his debt in the most convenient way as far as his budget is concerned. Payment plan can last from 3 years to five years of repayment provided that certain criteria are met.

Chapter 11 is almost similar to Chapter 13 only that this type of bankruptcy offers assistance to companies and corporations who are facing insolvency (not only limited to individuals). This type of bankruptcy can be filed whenever it is necessary provided that there should be monthly instalment payments as agreed with the creditor.

Tags: Filing For Bankruptcy, chapter 11 bankrutpcy, credit card bankruptcy, types of bankruptcy, Chapter 7 Bankruptcy, filing chapter 13 bankruptcy, Chapter 13 Bankruptcy

Related posts:

1. 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...
2. Credit Cards after Bankruptcy When financial crisis and too much debt threaten to take everything from you, filing for bankruptcy may seem to be the best solution. Indeed it is true! Filing for bankruptcy is really the easiest way out but are wondering what happens after bankruptcy? Due to financial difficulties, lots of Americans...
3. Setting Up a New Business After Chapter 7 Bankruptcy As a business owner you may want to file for bankruptcy if you are drowned in a sea of credit problems, and there is no way out. But before you take your final decision, consider consulting anon profit debt relief agency to to settle debt on credit card. A large...
4. Claiming Credit Card Bankruptcy Thanks to increasing trends of people swiping their cards whenever there is a need to get money, it has now become somewhat common to come across cases of credit card bankruptcy. Despite it being an easy way out of your knee deep credit card debt, don’t be fooled by it...
5. Possible Bankruptcy Credit Cards A case of bankruptcy is something that leaves big black mark on your financial record. It can prevent you from getting funds in the future for a number of reasons and might possibly make it complicated for you to be trusted with credit or even be approved for basic loans....