Types of Bankruptcy

Before you file bankruptcy, it is important for you to be informed about the different types of bankruptcies and whether bankruptcy is even the best option for you.The most common reason for bankruptcy is simply that you have too much debt, and not enough income to pay off these debts. However, you need to take a hard look at your finances before deciding to file bankruptcy. First of all, create a budget that details your income, your expenses, and your current debt. If you can create a budget that takes cost of living into account and one that allows you to have your debt paid off within the next couple years without unreasonably undue hardship, bankruptcy may not be for you. Another option considered by consumers is hiring Consumer Debt Counselors. These companies advertise and tell consumers that they may be able to negotiate with credit card companies to reduce your late charges and interest rates, especially if there are mitigating circumstances in your personal life (i.e. lost your job, medical expenses, family troubles, etc). They may then put you into a monthly payment plan to repay your creditors.  However, there are a few problems with such debt counselors.  First, some credit card companies may choose not to negotiate and not enter into the payment plan.  As a result, that credit card company may continue to independently collect its debt from you and may even sue you in court.  Second, when you are put into a payment plan, a portion of your monthly payments go towards fees for the debt agencies.If, however, you've already tried debt counseling and your debts seem insurmountable, then it is time to consider filing for bankruptcy.  Unlike some creditors being able to opt out of a consumer debt payment arrangement, all of your creditors are forced into your bankruptcy.  There are different types to choose from, and it is important that you choose the type that's best for you and your future.Most Common Bankruptcies Filed By Consumers            Chapter 7—This is the most common type of bankruptcy, and is also known as "Liquidation            Bankruptcy".  When a person files Chapter 7 Bankruptcy, they give their non-exempt assets toa court-appointed trustee, who then liquidates (sells off) those items to help pay your debt. Any debt left over after liquidation is complete is discharged, and the income that the filer makes after filing remains theirs. Chapter 7 can be filed be individuals, partnerships, or corporations.Chapter 11—This is a complicated form of bankruptcy used for mostly for businesses. They maintain ownership and control of all assets, however, they must create a repayment plan to their debtors within 120 days.Chapter 13—This type of bankruptcy is very similar to Chapter 11, except that it is most commonly used by individuals, not businesses. In this form of bankruptcy, the debtor maintains and owns all of their assets, but has to work out a repayment plan of 3-5 years. Some of the debt may be discharged depending on income and circumstances. Hiring a Bankruptcy Attorney From California to Philadelphia, bankruptcy is being filed by thousands of struggling individuals and corporations in order to get a “fresh start”. You need an attorney who has the compassion, experience and patience to deal with your creditors and get you back on the right track.