What are the different types of bankruptcies?
There are three different types of bankruptcy available to most individuals, and two types for businesses. We refer to them as “Chapters” because each has been created under a different chapter of the Bankruptcy Code. Chapter 7 Chapter 7 is often referred to as “straight bankruptcy” and is the most common bankruptcy filed by both individuals and businesses. Your assets are protected by exemptions, free from the claims of creditors (except mortgages and secured debts). If there are any assets that cannot be exempted, they are sold and the proceeds divided among your creditors. However that rarely occurs. An individual’s debts are then discharged (legally terminated), and you get the “fresh start” that is guaranteed every citizen under the law. Chapter 13 Chapter 13 allows you to pay some or all of your creditors off in monthly installments over time (usually three to five years). A payment “plan” is prepared which allocates how much money will be paid to your creditors each month. This
