Understanding Your Options When Declaring Bankruptcy

Understanding Your Options When Declaring Bankruptcy

Petitioning for bankruptcy is a last resort for debtors to get relief. Because bankruptcy is a serious business where many far-reaching decisions must be made in a short amount of time, no steps should be taken on a whim and without the advice of a certified bankruptcy lawyer. Different varieties of bankruptcy can be declared depending on one’s financial position. Attorneys determine the best form for their clients and work to achieve the most favorable conditions in bankruptcy court.

Chapter 7

Types of bankruptcy are referred to by their chapters in the Bankruptcy Code. Chapter 7 is the most basic, and by far the most common, form of personal bankruptcy. Fittingly called “simple bankruptcy”, a Chapter 7 bankruptcy can clear most of your debts as quickly as possible. Some exceptions apply, such as student loans, child support payments, criminal penalties, and possibly mortgages or car payments.

Chapter 13

Chapter 13 is the next most frequent kind of bankruptcy, designed for debtors ineligible under Chapter 7. Also called Wage Earner Bankruptcy, Chapter 13 gives gainfully employed persons an alternative means to manage their debt. In exchange for the right to hang on to their possessions, debtors through their lawyers present a reorganized repayment plan based on a percentage of their income over the following three to five years which they can realistically put toward their debts. The arrangement is then sanctioned by a judge as legally binding, assuming no creditors open a bankruptcy adversary proceeding Columbus OH against the debtor.

Other Options

Chapter 11 bankruptcy is regularly mentioned in the media. While principally meant for businesses, Chapter 11 is also used by celebrities and wealthy individuals with vast estates. Much less well-known, Chapter 12 assists those who farm or fish for a living. Chapter 15 cases deal with foreign nationals’ American debts.

If you’re dogged by severe debt, filing for bankruptcy gives you a final chance at a clean slate. An attorney can find you a road out of financial ruin and help you proceed on good terms.