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What types of
bankruptcies are available?
There are four types of
bankruptcy cases provided under the law:
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Chapter 7 is known as
“straight” bankruptcy or “liquidation.” It
requires a debtor to give up property which
exceeds certain limits called “exemptions,”
so the property can be sold to pay
creditors.
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Chapter 11, known as
“reorganization,” is used by businesses and
a few individual debtors whose debts are
very large.
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Chapter 12 is reserved
for family farmers.
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Chapter 13 is called
“debt adjustment” or “wage earner”
reorganization. It requires a debtor to file
a plan to pay debts (or parts of debts) from
current income. |
Most people filing bankruptcy
will be eligible to file under either chapter 7
or chapter 13. Either type of case may be filed
individually or by a married couple filing
jointly.
Chapter 7
(Straight Bankruptcy)
In a bankruptcy case under chapter 7, you file a
petition asking the court to discharge your
debts. The basic idea in a chapter 7 bankruptcy
is to wipe out (discharge) your debts in
exchange for your giving up your non-exempt
property (the law allows you to keep certain
“exempt” property). In most cases, all of your
personal property will be exempt. But property
which is not exempt is sold, with the money
distributed to your creditors.
If you want to keep property like a home or a
car and are behind on the payments on a mortgage
or car loan, a chapter 13 case probably will be
the right choice for you.
Click here
for additional questions and answers on Chapter
7 Bankruptcy.
Chapter 13
(Reorganization)
In a chapter 13 case you file a “plan” showing
how you will pay some part of your past-due and
current debts over three to five years. The most
important thing about a chapter 13 case is that
it will allow you to keep valuable property—especially
your home and car—which
might otherwise be lost, if you can make the
payments which the bankruptcy law requires to be
made to your creditors. In most cases, these
payments will be at least as much as your
regular monthly payments on your mortgage or car
loan, with some extra payment to get caught up
on the amount you have fallen behind.
You should consider filing a chapter 13 plan if:
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You own your home and are
in danger of losing it because of money
problems;
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You are behind on debt
payments, but can catch up if given some
time; or,
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You have valuable
property which is not exempt, and you can
afford to pay creditors from your income
over time. |
You will need to have enough
income in chapter 13 to pay for your necessities
and to keep up with the required “plan” payments
as they come due.
Click here
for additional questions and answers on Chapter
13 Bankruptcy.
For
more information about bankruptcy, please
call us at 408-294-6100, or e-mail us via
info@sjconsumerlaw.com. One of our
attorneys will be able to answer any questions
which you may have in greater detail. Please
remember that the foregoing information is of a
general nature, and does not constitute legal
advice. The facts of each situation are unique,
and we must discuss those facts with you before
any advice can be given. |
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