Filing for bankruptcy may seem like a daunting process, but having a better understanding your options may help provide a better peace of mind. Listed below is a basic overview of the most common types of bankruptcy filings.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is filed when an individual has little to no money left over after paying basic expenses. It is typically used for the purpose of completely starting over. Although it is rare, one’s assets can be liquidated in order to pay off debts. The advantages of filing for Chapter 7 bankruptcy are that most unsecured debts can be completely eliminated and the entire process is relatively quick.
What is Chapter 11 Bankruptcy?
Chapter 13 bankruptcy is filed when an individual has a steady, regular income and can afford to pay off basic expenses, but has a difficult time keeping up with payments on debts. Chapter 13 bankruptcy is filed for the purpose of holding on to assets while discharging some, if not all of your unsecured debts. The advantages of filing for Chapter 13 bankruptcy include keeping your possessions and property, and taking 3 to 5 years to pay off your debts on a payment schedule, rather than at a quicker rate the creditors would prefer.