Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is primarily about liquidating all of a debtor’s unsecured debts. A Chapter 7 Consumer Liquidation Bankruptcy can be utilized when the monthly payment on all personal overhead (rent/car payment/utilities/groceries) exceeds your take home income. Generally, you will keep your home and your car under the current state of the law. A Chapter 7 Bankruptcy’s main purpose is to discharge most kinds of debts. Debts such as credit card debt, hospital bills, repossessed cars or deficiency judgments on foreclosures are typical debts that are dischargeable. When a Chapter 7 is complete, you no longer owe the debt.
Chapter 11 Bankruptcy
The chapter of the Bankruptcy Code providing (generally) for reorganization, usually involving a corporation or partnership. (A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.)
Chapter 13 Bankruptcy
A Chapter 13 Bankruptcy (personal reorganization) is essentially consolidating your debt into one payment. It is most often used by debtors who are attempting to stop foreclosure of a home or repossession of an automobile. Chapter 13 allows you to “catch up.” Chapter 13 Bankruptcy is about forcing creditors to negotiate with you subject to a bankruptcy trustee’s approval. Often times, Chapter 13 Bankruptcy forces creditors to settle for pennies on the dollar. Once again, you take control and you set forth a Chapter 13 Bankruptcy plan that you can work with. Chapter 13 Consumer Bankruptcy applies when your income exceeds your monthly personal overhead to some extent, such that you are able to repay some portion of the debt back. Once again, however, recognize Chapter 13 Consumer Bankruptcy is about putting you back in control.
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