Know Your Debt Options

Bankruptcy is a legal procedure, which aims to help consumers and businesses in the payment of debt or eliminating them under the protection of bankruptcy court. The right to file for bankruptcy is provided by federal law, and such cases are handled in federal courts. Bankruptcy is also a different way depending on the type of bankruptcy, such as "liquidation" or "reorganizations."

There are six types of bankruptcy, as noted in Title 11 United States Code. The most common and most discussed are the different types of bankruptcy chapters 7, 11 and 13 In other, less common forms of bankruptcy include Chapter 9, which deals with municipal bankruptcy and Chapter 12 bankruptcy, which is reserved for those who are in the field of agriculture, usually a family of farmers and fishermen.

Chapter 7 bankruptcy, also known as "straight bankruptcy", is the most common form used in the United States. Chapter 7 bankruptcy involves the liquidation of assets, which will lead to the surrender property that is not exempt under federal and state law. These exemptions include clothing, cars (in some cases) and household equipment. Properties which are not exempt, such as vehicles with a delay of payment of the loans are sold by the trustee, who then distribute the proceeds to secured creditors. In most cases, Chapter 7 bankruptcy, debtors have been able to maintain all its properties. Those who have sufficient disposable income after allowed expenses and monthly debt payments are eligible for Chapter 13 are generally excluded from filing Chapter 7 bankruptcy.

Chapter 13 bankruptcy submitted for reimbursement of the plan outlines how the debtor intends to repay the debts due by a certain period of time that depends on the value of the assets of the debtor, the debtor and the amount of expenditure and revenue. The average repayment period ranges from 3 to 5 years. It is a "wage earner in bankruptcy" as the debtor must have a solid, reliable source of income to be used to repay debts owed.

Chapter 11 bankruptcy is commonly referred to as a "reorganization" and is often used by companies that exist in corporations or companies and individuals with very large debts. When a company files Chapter 11 bankruptcy, cessation of its business and all assets sold by the trustee, who then distribute the proceeds to creditors, the return of any remaining amounts to the owners of the company. In most cases, the debtor retains control of economic activity, as the "debtor in possession. A" debtor in possession "may also be financed by loans and favorable terms and rates subject allowing creditors involved primarily an economic activity. Depending on the overall scale of bankruptcy, the company can go bankrupt in a few months or several years. In the case of debts owed by enterprises exceed its assets, the debtor's property rights and interests are terminated, with creditors of the reorganized company.

There are certain obligations that bankruptcy can not erase. This includes tax debts, child and spousal support obligations. Student loans can not be discharged in the bankruptcy, unless it is shown that the proof of the loan to put undue hardship on you or your family.
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