Making the decision to file for a bankruptcy should not be taken lightly. It’s not just a matter of conceding that you are in dire financial straits, and that the only way for you to recover is to start from scratch again.
There are plenty of other variables that must be taken into consideration, all of which would preferably go through a consultation with your bankruptcy attorney first. There are also different kinds of bankruptcy, so make sure to know which one applies to your situation best.
Types of Bankruptcy
A Chapter 7 is a remedy for both individuals and businesses. Here, properties may be liquidated and then used as payment for the creditors. In order to file for this, however, your income must reach a certain threshold, which is usually dictated by state laws.
Meanwhile, a Chapter 13 filing allows you to propose a more viable repayment plan to your creditors granted that you have a reliable source of income. Therefore, it doesn’t have that note of finality unlike Chapter 7. This kind of bankruptcy is also otherwise known as the “wage earner” bankruptcy.
Chapter 9 is for municipalities who need to reorganize, while Chapter 12 is characterized to be a lot like Chapter 13, except that it is a remedy exclusively reserved for businesses with up to 80% of debt coming from a farm or fishery owned by the family.
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