These days from all over the world we hear of cases where even large companies have gone bankrupt with the recession taking it toll on businesses and businessmen. It’s surprising therefore that even those who are filing for bankruptcy is sometimes ignorant of the types of bankruptcy.
Thinking of bankruptcy lightly imagining it to be the easier solution is not a smart thing to do. You should know that there are various methods to stop yourself from as many would call it ‘going broke’. Of course this should be the very last resort. However if you are convinced that you are bankrupt you should educate yourself about the types of bankruptcy to know what would be relevant in your particular case.
If you are not aware even about the very basics it would help you to know that there are 2 main types of bankruptcy namely, chapter 7 and chapter 13 bankruptcy. Chapter 7 bankruptcy relates to a case where it’s quite straight forward. It’s commonly called ‘straight bankruptcy’. If you happen to be in possession of assets of fairly in insignificant value and has a lot of unsecured debt then this is relavent to you.
Chapter 13 is the other main component when considering the types of bankruptcy. This is quite different from chapter 7. You would have to pay all or a considerable amount of your debt through your income and the time period could be anything between 3 – 5 years. Your secured debt should be less that $750000 and unsecured debt should also be less than $250000.
Most of your debt will be cancelled if you fall under chapter 7 among the types of bankruptcy. However keep in mind that any debt in the form of federal tax bills or child support will have to be paid. It would be mentioned in your credit history in the case of both chapter 7 and 13 bankruptcy and that is why it’s only advisable to file for bankruptcy if the situation appear to be hopeless.
Chapters 9, 11 and 12 are the some of the other lesser known components in different types of bankruptcy. Those categorized as family farmers fall under chapter 12 while chapter 9 pertains to municipalities and governmental units. Chapter 11 on the other hand pertains to those individuals with fair incomes and assets.
Choosing the correct chapter among the types of bankruptcy is one very important task that would be determined by your circumstances and if your knowledge on the subject of types of bankruptcy is insufficient it’s advisable to seek professional help because the matter in question is one which happens to be very delicate.
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