Bankruptcy is a plague that affects many people from all kinds of walks of life. In the United States, bankruptcy is typically categorized into five types: Chapters 7, 9, 11, 12, and 13. Here we list what these types mean. If your particular condition falls under any of these categories, we recommend consulting with the Law Offices of Scott J. Goldstein in Denville, United States. Before proceeding, it’s important to remember that to each problem; there are solutions; you are never alone. Many people face this at some point in their lives and successfully come out of it.
Chapter 7
Also known as liquidation, this time of bankruptcy arises when debtors have less income than their state’s median income. This means they live considerably below the poverty line and allows them to walk away from most of their pending debts.
Chapter 9
Chapter 9 bankruptcies allow municipalities to reorganize their debt. This applies to school districts, counties, and cities. This can be damaging to their reputation, and it is also extremely expensive to file for chapter 9, adding to their pending debt.
Chapter 11
Chapter 11 bankruptcy is also called reorganization of debt. It allows individuals and businesses to restructure their debt and repay their dues without the risk of losing their assets. This is applicable to personal as well as corporate assets.
Chapter 12
This pertains to farmers and fishermen with regular income and allows them to reorganize their pending dues. Similar to chapter 13, this kind of bankruptcy is more advantageous to low-income individuals, such as farmers, with much larger debts pending.
Chapter 13
This type of bankruptcy allows for repayment to creditors in three to five years. Only debtors who have a regular income qualify for chapter 13 because repayment needs to be crucially made with full interest, although some creditors allow otherwise.
To conclude, all five kinds of personal bankruptcy have solutions in place. Whether it is disorganized debt, lower income than the state’s median income, municipal dues, or exorbitantly high debts to be repaid, each of these problems comes with a solution sanctioned by the government of the United States of America. While it’s completely normal to feel overwhelmed in these types of situations, keeping these points in mind will help you take action and organize your finances. However, filing can be a complicated process, so hiring a bankruptcy attorney is advisable for those who find themselves in these kinds of conundrums.
