Bankruptcy
Bankruptcy is a legal mechanism that provides relief for individuals or entities unable to repay their debts. Typically initiated by the debtor and enforced by a court order, this process varies by jurisdiction.
Chapter 7 enables you to completely eliminate your debts, whereas Chapter 13 reorganizes your debts into a more manageable payment plan.
Chapter 7
Chapter 7 bankruptcy allows for the permanent discharge of unsecured debts such as credit card bills and medical expenses. This process may involve liquidating certain assets to pay off creditors. A skilled bankruptcy attorney can guide you through this, helping to protect essential assets like your home and vehicle.
Chapter 13
Chapter 13 bankruptcy involves creating a repayment plan to manage most or all of your debts. Instead of multiple payments to various creditors, you make a single monthly payment until your debts are cleared. Your bankruptcy attorney will assist in crafting this plan. Additionally, an automatic stay is granted, halting contact from creditors and preventing repossession or foreclosure.
Chapter 11
Chapter 11 bankruptcy is typically the most complex and costly type of bankruptcy proceeding. It requires careful consideration and thorough analysis of all alternatives before proceeding. This option is generally used by businesses seeking to reorganize their debts while continuing operations.