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BANKRUPTCY

Personal Bankruptcy

Also known as Consumer Bankruptcy, this pertains to individuals. Individuals may choose to file bankruptcy to resolve a hopeless financial situation, or to delay debt-collection for a period of time to allow for financial reorganization. Personal Bankruptcy generally takes one of two forms: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. Chapter 7 Bankruptcy is a way for Debtors to get a "Fresh Start" and eliminate debt.

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy is by far the most favorable because you can enter into it and “discharge” all of your debt. That means you will not have to pay any of it back. However, there is a specific criterion that must be met in order to qualify for Chapter 7 Bankruptcy. It is a way for Debtors to get a "Fresh Start" and eliminate all debt.

Typically, Chapter 7 works best for those who:
  • - Have lots of debt they can no longer afford.
    - Do not own much property with equity, or have other substantial assets.
    - Do not have much income. In order to qualify, you must meet certain income requirements. We can look at your finances and let you know if you qualify for Chapter 7 Bankruptcy.
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Chapter 13 Bankruptcy

Chapter 13 Bankruptcy involves working with the courts to consolidate, restructure, and possibly reduce your debts. Afterward, you will make one monthly payment to a court-appointed trustee who will take care of paying your creditors.

Chapter 13 may be right for those who:
  • - Have incurred debt as a result of a temporary financial setback, (i.e. job loss, injury or illness).
    - Have substantial assets such as real estate, automobiles, business assets that they want to retain.
    - Have a source of steady income with which to make payments to the trustee.
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Business Bankruptcy

Corporations, Limited Liability companies and Partnerships are legal entities separate from their shareholders or partners. They can file Chapter 7 Bankruptcy or Chapter 11 Bankruptcy, while proprietorships cannot. The proprietor must file bankruptcy individually, since the assets and the liabilities of the business are really just one form of assets of the proprietor. The individual owner may file Chapter 7, Chapter 11 or Chapter 13 Bankruptcy.

Business Bankruptcy Chapter 7

Chapter 7 Bankruptcy involves the total liquidation of the business assets in order to repay debts. If you qualify for Chapter 7, a court-appointed trustee will collect all non-exempt assets, sell them and distribute the proceeds to creditors. Chapter 7 Bankruptcy, whether for the individual or a business, may be the best choice when:

  • - The business has no future.
    - The business has no substantial assets.
    - The debts are too great to be reorganized.
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Business Bankruptcy Chapter 11

Debtors who prefer to remain in business, have substantial assets, and wish to avoid liquidation may choose Chapter 11 Bankruptcy. While Chapter 7 Bankruptcy is a liquidation of debt, Chapter 11 Bankruptcy is a reorganization of the debt. Under Chapter 11, the business is restructured so that it may meet its obligations from future earnings. Under Chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. The downside of Chapter 11 bankruptcy is that it is expensive and time-consuming and can add stress to an already weakened business.

Business Bankruptcy Chapter 13

If the business is a sole proprietorship, it may be eligible for relief under Chapter 13 of the Bankruptcy Code. Chapter 13 Bankruptcy enables individuals who have steady income to repay all or part of their debts over a specified time period. One of the main advantages of Chapter 13 is the an opportunity to save their homes from Foreclosure. By filing Chapter 13, individuals can stop Foreclosure proceedings and may cure delinquent mortgage payments over time. Any individual or Proprietorship is eligible for Chapter 13 relief as long as the individual meets the qualifications. A Partnership or Corporation must file Chapter 11 Bankruptcy.

Business or Personal Bankruptcy: Chapter 7, Chapter 11, Chapter 13