The United States Bankruptcy Code can be incredibly confusing for the uninitiated, with its complex set of chapters and codes that can be daunting to say the least. Bankruptcy claims are on the rise because of the down economy, with approximately 1.5 million Americans filing for debt protection last year alone. If you're one of the millions of people facing heavy levels of unsecured debt, knowing your various options can put you ahead of the game, and better able to act responsibly to protect your financial future.
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There are six major chapters in the United States Bankruptcy Code, each of which provides debt protection to a specific group of debtors.
Chapter 7
This is a liquidation bankruptcy, in which the filer's assets are liquidated and the profits from this sale are used to pay back the creditors. Because of its simplicity and the fact that both individuals and corporations can file for it, it is the most common form of bankruptcy in the country.
While many people may balk at the idea of having their property liquidated, Chapter 7 actually allows for several exemptions, which may allow you to keep your car and your house. This form of bankruptcy can be a good way for people with heavy unsecured debts to clear their debts and start fresh.
Chapter 13
This is a debt reorganization bankruptcy, in which the debtor forms a plan to pay back the debts over time. Whereas virtually anyone can file for Chapter 7 if they meet the requirements, a Chapter 13 filing requires that you have the steady income it takes to pay off debts. If you do not have the income to pay off your creditors, a Chapter 13 filing may not be your best option. However, if you have a regular income that could support slowly repaying your debts, this may be your best option.
Chaoter 13 is available only to individuals. Chapter 11 is a similar form that can be filed by corporations, while Chapter 12 allows for reorganizing bankruptcy for farmers and fishers.
In Summation
While it may not be right for everyone, filing for bankruptcy may be your best option to overcome your debts and start working towards financial solvency. To learn more about how filing can help you, visit the website of the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office, LLC, today.
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