Debt can weigh you down. Filing for bankruptcy can be a solution in such instances. It will stop multiple collection activities, including eliminating some debts. This move will allow you to reorganize your debt portfolio, catching up on missed mortgages and other loans. Yet, it would be best to understand the different types of bankruptcy you could file.
Chapter 7 Bankruptcy
You could also refer to it as liquidation bankruptcy. Chapter 7 bankruptcy is the most straightforward and popular path an insolvent bank takes.
This arrangement requires the court to place an instant stay on your debts. As such, it becomes easier to ward off creditors from your assets or properties. Creditors are restricted from collecting payments, foreclosing properties, and garnishing wages. However, some debts cannot be discharged from chapter 7 bankruptcy: child support, alimony, court fees, and tax liens.
Chapter 13 Bankruptcy
This type of bankruptcy is also called the wage earners plan. Usually, Chapter 13 bankruptcy allows an individual to make a comprehensive payment plan, repaying part or all the amount owed.
However, you must have proof of regular income to qualify for Chapter 13 bankruptcy. In addition, your unsecured credit should not be more than $419275, while secured loans have been capped at 1,257,850. Your tax filings must also be in check. Remember, you cannot file for Chapter 13 bankruptcy less than two years after a previous application.
Chapter 9 Bankruptcy
This form of bankruptcy is designed for financially-distressed municipalities, protecting them from their creditors. This form of bankruptcy allows the municipality to negotiate with its creditors during this period. The idea is to create a repayment plan that works in favor of both parties, resolving the outstanding debt.
Various aspects are considered to qualify for this bankruptcy application. Usually, the municipality will have to prove that it is insolvent. It also must show good faith by negotiating with the creditor to resolve problems.
Chapter 11 Bankruptcy
IF you are looking forward to reorganizing business debts, affairs, and assets, Chapter 11 bankruptcy is an ideal choice. It is designed for business bankruptcy Columbia MD and married couples. This arrangement allows a business to retain its control and possession over assets. However, this business will remain under the supervision of a bankruptcy court until it gets to its feet. There will be no collections, property repossessions, and judgments during this period.
In conclusion, different types of bankruptcy are at your disposal. However, you must understand what they bring to the table before filing for one.