What Are The Differences Between The Types Of Bankruptcy

Businesses and individuals are able to eliminate or repay their debts under the supervision and protection of a court under a process called bankruptcy. They get a chance to reorganize their financial status afresh after clearing with their creditors. There are many types of liquidation and reorganization that can be applied for but two of them are most common; chapter 7 and chapter 13.

Chapter 7 is the most common type and is hence referred to as liquidation or total bankruptcy. It is referred as liquidation because a trustee can take and liquidate some of your property to repay your debt or part of your debt. Chapter 7 can be filed by either an individual or a business enterprise. This type offers erasure of all your unsecured debts and you are also allowed to keep property which is classified as exempt by the federal laws which include clothes and household furniture.

This liquidation is the most common form of bankruptcy filing since it is a faster method of reorganizing financially. It is even faster especially when there are no objections fro the parties involved in the filing. Most of the debts are always dealt with in this method soon after successful filing by an attorney. The advantage of this method is that a debtor can continue paying for a mortgage after signing a reaffirmation agreement.

Chapter 13 on the other hand gives an individual the opportunity to repay some of or all his debts under his name in better terms. These terms can be lower interest rates or no interest rates at all. An individual gets a chance to restructure his debts by devising methods that he will be able to pay his creditors with. Unlike chapter 7 where you certainly loose most of your assets, your property is retained. Chapter 13 is however a slower process compared to chapter 7 and also suitable to individuals who earn regular income.

Creditors will not be knocking on your door again demanding their settlement. When the bankruptcy order application is completed and finalized, creditors are not allowed to follow you again demanding their money thus shielding you from their harassment and embarrassment. In some cases the debts can be cancelled completely giving you peace of mind and a chance to reorganize your financial base.

Declaring yourself bankrupt in along way undermines your financial future and credit worth. Creditors will be afraid giving you loans in an attempt to avoid the repetition of filing to honor their debts. Individuals are sometimes not allowed to purchase ting on credit and their credit cards are mostly confiscated. You might end up loosing your assets totally for they will certainly be auctioned to repay your debts.

The implications of liquidation are many, and they include the loss of some or all of your assets. People who are declared bankrupt mostly loose their credit cards and their public image is sometimes tainted by publishing. You cannot practice is some professional jobs such as chartered accountant or be a director of a company. Individuals are sometimes not allowed to trade using other names unless they send notifications to the other concerned parties.

Liquidation should always be chosen as the last option after unsuccessfully trying other options like selling your assets. Before choosing which type to apply for, it will be prudent to discuss the matter with a liquidation attorney for advice.

A debt consultant can help you resolve your bankruptcy Burlington problems. Financial questions and concerns can be addressed by our bankruptcy Niagara falls experts in a friendly and professional manner.

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