When financial troubles arise, you may feel stressed, scared, or overwhelmed. You may receive letters, phone calls, or emails from debt collectors demanding payment or threatening you. Your credit score may also be affected by debt. This can impair your ability to get a loan, buy or rent a home, or buy a car. So, what do you do? To ease serious financial trouble, many people decide to explore bankruptcy.
Bankruptcy is a type of legal proceeding through which filers (also called debtors) can resolve or eliminate debt, or get a fresh financial start. When you file bankruptcy, creditors cannot attempt to collect debts from you until the court has resolved your case according to the law. Further, depending on which form you file, you may exit bankruptcy with a better overall financial standing, and a credit score that will be more easily improved. Let’s take a look at the common forms of bankruptcy that may be right for you.
Common Forms of Bankruptcy
There are four forms of bankruptcy, each named for the chapter of United States Bankruptcy Code represented. A brief description of each form includes the following:
Chapter 7 is the most common form of bankruptcy filed by individuals or families. This is also called “straight” or “liquidation” bankruptcy because the debtor will either ask the court of discharge the debt altogether, or will liquidize (sell) assets beyond a certain limit in attempt to pay back a portion of debts.
Chapter 11 is a form of bankruptcy most often used by businesses. Many large businesses have used Chapter 11 to reorganize and resolve debts. Chapter 11 is considered a “reorganization”, and is generally pursued by debtors with very large debt or complex assets. It is important for these clients to work with a skilled lawyer who can help them sort through complexities.
Chapter 12 offers specific provisions for family farmers and fishermen. This form of bankruptcy allows more flexibility given the seasonal nature of farming and fishing. It is a good option for families who need flexibility in structuring payments, or who need help assessing their options for liquidation.
The second most common form of bankruptcy, Chapter 13 is considered a form of “debt adjustment”. Under Chapter 13, the debtor works with the court to create a plan for repaying all or part of debt within the confines of his or her current income. Chapter 13 is recommended for individuals who have suitable income, but who have fallen behind on payments. It is also an option for people who have experienced a financial crisis that may be rectified with time.
Is Bankruptcy Right for Me?
The only way to determine if bankruptcy is right for you is to contact an attorney to discuss your financial situation and options. Daic Law offers guidance for clients considering options for debt resolution. Furthermore, we can help you understand the best course of action to improve your financial standing. Contact Daic Law today for a no-obligation consultation. Your initial consultation is completely free
Let our debt defense lawyer in Texas assess your situation and determine if bankruptcy may be right for you, and if so, which type. We will work together with you to create a better financial future for you and your family.