On average, between one and one and a half million Americans file for bankruptcy every year. Bankruptcy is filed when a person has too much debt and cannot repay their creditors. But why file for bankruptcy when it has been known to ruin your credit? There are benefits of filing bankruptcy including making some of your debts disappear permanently. There are different chapters of bankruptcy that can be filed, including Chapter 7, Chapter 11, and Chapter 13, which are the most commonly filed. Figuring out which one you may need to file will help your bankruptcy filing proceed quickly and efficiently.
1. Chapter 7 bankruptcy laws involve the liquidation of assets an individual owns. These are seized and sold off in order to repay the debts. Some property is exempt from being sold off as well, meaning the debtor may not lose all the property he or she owns. This is considered to be the quickest and most basic form of bankruptcy available. Nearly 65 percent of all bankruptcy filings in America are Chapter 7.
2. Chapter 11 bankruptcy code is mainly for businesses to file. Also known as Corporate Bankruptcy, this chapter can allow companies to function while their debts are being paid off. The debts are reorganized and restructured in order to help pay them off, but this is an often lengthy and costly process. It is also considered to be the most complex of the bankruptcy chapters.
3. Chapter 13 bankruptcy law sets up a payment plan for people who have a regular source of income. This form is also known as Wage Earner Bankruptcy and involves a reorganization of finances to pay back the same amount that other forms of bankruptcy would pay the creditors, but sometimes you may even have to pay more. Why file for bankruptcy in this chapter? People may choose this option because even though you only have three to five years to pay off your debts, you may be able to retain your assets.
If you need to file for bankruptcy, it is important to choose the option that you believe will benefit you most. While there are other forms of bankruptcy available, these three are the most commonly filed. So for those who are wondering, why file for bankruptcy? It is because even though you have a mountain of debt, there is still hope to get you out of it. Read more blogs like this.