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A Guide to the Different Chapters of Bankruptcy

If you’re on the verge, or even just considering the concept, of filing for bankruptcy, understanding your options is an important step. People commonly hear about Chapter 7 or Chapter 11, but may be unsure of the difference. The truth is the Bankruptcy Code allows for five different types of bankruptcy and understanding the difference between each is critical. An experienced attorney can guide you toward the best bankruptcy protection option based on your particular situation.

Chapter 7
This is the type of bankruptcy that is most commonly utilized by individual debtors. Also referred to as straight bankruptcy or liquidation, the process can last up to six months and entails the discharge of most debts through a court-appointed administrator so you can have a fresh start.

Chapter 13
This type is also used by individual debtors but usually lasts a little while longer (typically three to five years). During the process, debtors are permitted to settle their unsecured debt such as credit cards and different types of loans for a percentage of their original balance, but need to pay their tax debt in full before they can start over again. Chapter 13 allows debtors to stay in their homes as it requires a plan to make past-due mortgage payments.

Chapter 11
Chapter 11 is primarily used by companies, but is occasionally used by individual debtors. The process involves developing a customized payment plan, at the end of which most debts are discharged.

Bankruptcy is not a process you should undertake without experienced legal representation. These laws are quite complicated; rely on a professional to guide you through the process and make sure you’re being treated fairly by the courts.

The Law Firm of Joel R. Spivack specializes in helping clients through bankruptcy. We understand that it can be an uncomfortable ordeal and we are here to help you complete the process as soon as possible so you can move on with your life and start rebuilding. Contact us now to get your fresh start.