Chapter 13 Bankruptcy

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For individuals there are two main types of bankruptcy. Where Chapter 7 bankruptcy is a type of liquidation bankruptcy, Chapter 13 is a type of reorganization or rehabilitation bankruptcy.

Chapter 13 bankruptcy is a way of filing for individuals in the United States that allows the debtors to plan and undergo a financial restructuring and reorganization that is supervised by a federal bankruptcy court.

Provided debtors fulfill a court approved payment plan and refinancing plan, debtors with a steady income will be allowed to rehabilitate and find a stable financial standing once again.

Chapter 7 bankruptcy, on the other hand, is about liquidating all assets in order to provide an immediate and large relief fro ma collection of debts that are not able to be paid.

With Chapter 13 bankruptcy, debtors are not allowed to be asked for debts owed, and creditors must work through the court system to get repaid. In Chapter 13 bankruptcy it is common for debtors to be required to pay back only a portion of the amount they originally owed to creditors.

The main difference between Chapters 7 and 13 is that Chapter 13 debtors are required to come up with a three to five year repayment plan that will be supervised and facilitated by a court trustee as well as other agents of the court.

In order to find out which type of bankruptcy makes the most sense in your situation, the best thing to do is perform some of your own research and find a bankruptcy attorney that will guide you through the entire process.

A good bankruptcy attorney will not charge a consultation fee. So make a few appointments with different bankruptcy lawyers and see what they have to say. Be sue to choose an attorney that you feel understands your position and lets you ask questions. You’ll work best with an attorney that has a good relationship with his or her clients.

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