As a bankruptcy lawyer Milford residents rely on from The Law Offices of Neil Crane can explain, bankruptcy can be an invaluable financial tool that those who are facing financial hardship can utilize to alleviate the overall burden. When serious debt issues are addressed proactively by means of bankruptcy, one can more easily envision a path to resolution.
We created this guide to help those who are brand new to the concept of bankruptcy build a basic understanding of the various forms of bankruptcy, as well as the fundamental concepts associated with the process of filing for bankruptcy and how it can help your financial situation.
Types of Bankruptcy
Chapter 7 – Individuals who file chapter 7 bankruptcy benefit from being able to relinquish un-exempt property and assets in exchange for debt relief. The fundamental structure of chapter 7 involves an evaluation process to determine what property and assets may qualify, and then that property may be sold to help repay creditors. In some cases, the most valuable property may be exempt from liquidation.
Chapter 11 – Also referred to as “reorganization”. Chapter 11 bankruptcy is a tool that businesses can utilize when their debts are large. In most Chapter 11 scenarios, the debtor will maintain possession, and may be eligible to continue operation of their business. Borrowing of new funds may also be possible, but is subject to court approval.
Chapter 12 – This form of bankruptcy is designated as being specifically structured to address debts of family farmers and fishermen. Chapter 12 enables the families to propose and execute a debt repayment plan under which repayment can take place over the course of 3 to 5 years.
Chapter 13 – Another form of reorganization that is geared towards meeting the needs of individuals, as opposed to businesses. In Chapter 13, the debtor can commit to a repayment plan over a set period of time, and the dollar amount of payments is based on the income level of the debtor. Both Chapters 7 and 13 are the most common forms of bankruptcy utilized by individuals.
Primary Advantages of Bankruptcy
For those who are facing potential financial devastation, bankruptcy can prove to be a viable option for outlining a more clear path towards resolving debt.
- Ceasing foreclosure on a house or real estate property.
- Preventing or limiting repossession of a car or other valuable property, and can also require the creditor to return property after repossession.
- Halting of debt collection harassment, wage garnishment, and overly persistent and otherwise intrusive actions to collect debt by creditors.
- Debtors can exercise their right to challenge creditor claims who may have committed fraud or are attempting to collect more money than what is actually owed by the debtor.
Bankruptcy should not be viewed as an easy solution to serious financial problems, rather as a useful financial tool for decreasing the overall impact of the legal repercussions of not being able to repay debts. Bankruptcy is only a viable option under specific circumstances.
If you are in substantial debt and feel that you lack the financial capacity for repaying it, consider consulting with an experienced attorney that specializes in bankruptcy.