Bankruptcy
What is Bankruptcy?
Bankruptcy
Bankruptcy serves a purpose for those that aren't left with many other options. It should typically be looked at as a last resort. However, if you feel it's the only option available to you, here's everything you need to know.
What is a Chapter 7 Bankruptcy?
According to Uscourts.gov, this chapter of the Bankruptcy Code provides for a "liquidation". In other words, the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors. When this occurs the debtor is no longer liable for all debts filed within the bankruptcy and is relinquished of all monthly payments.
What is a Chapter 11 Bankruptcy?
A Chapter 11 bankruptcy is similar to a Chapter 7 bankruptcy except that is processed for an organization or business as opposed to an individual. Uscourts.gov also states that a case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a "reorganization" bankruptcy. Assets are reorganized to make creditors whole on their liabilities and receive payment via term while still having the business keep its doors open.
What is a Chapter 13 Bankruptcy?
Uscourts.gov states that a chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. It is different from a Chapter 7 in that the debtor does not get out of debt scot-free and will still be liable for making payments for partial repayment of liabilities.
Reasons to Avoid Bankruptcy
Impact To Credit Worthiness - Filing for any type of Bankruptcy will leave your credit score and credit report in the dumps for a long time. The Bankruptcy will stay on your credit report for 7 to 10 years and you will be viewed as un-lendable in the long term.
Public Record - Any bankruptcies that are filed become public record. So anyone that conducts a background check can see that you've filed for bankruptcy (Employers, landlords, etc.)
Expensive - Filing for bankruptcy is costly and far from free. In order to correctly process the filing you will need a decent attorney (which tend to be quite expensive).
Property Loss - You may lose property that you own that is not exempt from sale by the bankruptcy trustee.
