Bankruptcy is a legal process that allows individuals and businesses eliminate or reorganize overwhelming financial debt. Filing for bankruptcy is not the answer for everyone, but for many people it can provide much-needed relief from foreclosure proceedings, creditor lawsuits, treats of repossessions, and endless debt collection phone calls.
Choosing to file bankruptcy should not be a decision that’s made without being fully informed of your rights and obligations under federal laws, starting with understanding the different types of bankruptcy, which include:
Chapter 7 Bankruptcy: This allows individuals to eliminate almost any unsecured debts, including personal loans, medical bills and credit card debts. Qualifying for Chapter 7 will be dependent on your family’s size, income and expenses.
Chapter 13 Bankruptcy: This form of debt relief is a better option for those who want to restructure their debt in order to protect certain secured assets, such as their home or vehicles. Chapter 13 allows individuals to reorganize their debt, putting together a plan for how creditors will be repaid, typically over a 3 to 5 year period. The repayment plan is determined by how much is owed, what type of debt, and how much disposable income is available.
Chapter 11 Bankruptcy: More commonly used for businesses, this option allows businesses to propose a plan of debt reorganization in order to keep the business functioning. There is no limit to the amount of debt that can be restructured.
Whether you are an individual or business, the experienced bankruptcy attorneys at Ostrom Morris can help you explore all of your debt relief options and advise you on whether bankruptcy is a good choice for your situation.