There are four types of bankruptcy: chapter 7, 11, 12, and 13. They are named depending on their chapters in the United States Bankruptcy code. The types differ based on the debtor, the debtor’s income, and the methods used in repaying the debts.
Chapter 7 and 13 bankruptcy are for individuals seeking to settle their debt. Bankruptcy can often be confusing and frustrating for an individual to understand, and contacting a San Antonio bankruptcy attorneycould make the process much more painless.
Chapter 7 bankruptcy is sometimes called a straight bankruptcy. It is basically a liquidation. With this type of bankruptcy, the debtor has to turn in all property for liquidations except that which is exempt. Basic household furnishings and work-related objects are those that might be exempt. The trustee then turns over the cash to the creditors. There is no reorganization in chapter seven, only declaration. It can be seen as a “fresh start” from the debtor in the way that ownership for non-exempt items is given up and the debtor gets to start over. Chapter 7 is generally a quicker process than chapter 13 and is the type that more individuals would qualify for.
Chapter 13 bankruptcy, or reorganization bankruptcy, is paid off by the debtor between three and five years. This is the option for debtors who earn wages but need another option to get out of debt. It is basically a consolidation rather than a liquidation. If you have a steady income, it is possible to keep non-exempt property like houses or cars. The court designates a payment plan to pay off the debt during this period of time. Chapter 13 has certain future income requirements in order to qualify.
Chapter 11 and 12 bankruptcy is for businesses or farmers.
Chapter 11 bankruptcy is typically used by businesses and the most complex of the four. Like with chapter 13, the debtor retains ownership of most aspects and works out a payment plan for creditors. Often the business continues to function.
Chapter 12 is similar to 11 and 13 in terms of maintaining ownership and paying back debts over time, except it is specifically for farmers.
There is also chapter 15 bankruptcy, but the law regarding this type deals mostly with jurisdiction between the United States and foreign courts regarding property and liquidation.
The types also differ in terms of fees for bankruptcy filing and amount of time the debtor has to agree to a payment plan.
Jeff Davis is the Owner of the Davis law firm and a highly experienced San Antonio bankruptcy attorney. To find out more information about a San Antonio bankruptcy lawyer, please visit www.jeffdavislawfirm.com.