Filing For Chapter 7, Chapter 11 Or Chapter 13 Bankruptcy
TYPES OF BANKRUPTCY?
Bankruptcy takes two different forms.
Choosing Chapter 7 Bankruptcy
Liquidation Bankruptcy – This bankruptcy gets rid of all dischargeable debt. The vast majority of all debt is dischargeable. However, bankruptcy does not necessarily get rid of liens on houses and cars. Thus, sometimes secured debt payments have to be made, such as house and car payments if you want to keep that property. Otherwise, as long as you can exempt your property, you can keep it. The vast majority of people filing a liquidation bankruptcy keep all their property. A liquidation bankruptcy is also known as a Chapter 7 Bankruptcy.
Chapter 11 Or Chapter 13 Bankruptcy
A Plan Bankruptcy – This bankruptcy is filed in order to permit some or all debt to be repaid through a “plan” – a written document proposing the amount and frequency of payment. Chapter 13 Bankruptcies and Chapter 11 Bankruptcies are examples of Plan Bankruptcies.Plan bankruptcies are filed for a number of reasons. A few of these are:
a. To catch up on car payments, house payments, or other secured debt;
b. To eliminate liens created by second, third or fourth mortgages;
c. To get rid of or discharge some debts that cannot be discharged in a Chapter 7 or liquidation case;
d. Because income exceeds expenses;
e. Because income exceeds means testing thresholds (amounts set by law); and,
f. Because the value of property exceeds exemptions.