When considering filing for bankruptcy, you may not be sure which category of bankruptcy you fall in and which type would be best for you to file. There are two primary types of bankruptcy, each designed for individuals based on their income and amount of debt.
Chapter 7 bankruptcy is designed for individuals who are overwhelmed with a large amount of debt, but do not have large assets that can be sold to help pay for the debt, or do not need protection from creditors during the bankruptcy process. During the liquidation process, what assets the individual does have will be sold to provide funding to the creditors for repayment of debts, but liquidation is typically faster than in cases where the individual has large assets that they have difficulty parting with.
Chapter 13 bankruptcy is designed for individuals who are overwhelmed with a large amount of debt, but do not wish to sell their valuable assets in order to repay their creditors. Instead of requiring the liquidation of assets to repay creditors as required by Chapter 7 bankruptcy, Chapter 13 bankruptcy involves a creditor repayment plan. This allows the individual to repay their creditors over a period of time without interest, usually three to five years. After the debts have been paid in full, the individual is released from financial responsibility.
Deciding which type of bankruptcy to file can be a difficult process. Consulting with a qualified bankruptcy attorney can help you make the right choice. Call The Law Office of Stewart Lim to schedule a consultation today.