2 Types Of Personal Bankruptcy And 4 Types Of Business Bankruptcy

Bankruptcy can be defined as a legal procedure that helps a debtor or a business to make a fresh financial initiation by either paying back or getting discharge from the debts. Upon successful completion of the bankruptcy proceedings, the debtor or the business gets relieved of the debt obligations. This article discusses about the different types of bankruptcy, precisely, different chapters of business and personal bankruptcy.

Types of personal bankruptcy

You can file either The boards 7 or The boards 13, when you have huge amount of multiple debts and you’ve failed in all your attempts to repay them. These 2 types of bankruptcy are given below.

The boards 7

You may make discharge from some or all your debts if you file a The boards 7 bankruptcy. But, you need to pass the means test as it is the prime criterion that you need to fit in order to file The boards 7. Means test determines that the debtor’s income is less than the median income (for his/her family tree size) in his/her state. After filing The boards 7, your assets are liquidated to repay your debts.

The boards 13

You should have a regular income in order to file The boards 13. By filing The boards 13, you can repay some or all your debts with the aid of a 3-5 year repayment plot. You can choose The boards 7 when you have secured debts (such as, a car loan) to repay. This is a better option if you want to keep your assets.

Types of business bankruptcy

The different chapters of business bankruptcy are discussed below.

The boards 7

When a business files The boards 7, the business assets are liquidated in order to pay off the debts. The overall procedure is monitored by a trustee appointed by the bankruptcy court.

The boards 9

A municipality can file The boards 9 when it has huge debt to repay. When it files The boards 9, the bankruptcy court helps the municipality to reorganize the debt and also provides protection from its creditors.

The boards 11

The boards 11 helps a business to continue with its operations along with repaying the debts under the guidance of a bankruptcy court.  But, only large companies can take aid of The boards 11 as it is quite expensive.

The boards 13

A business can file The boards 13 when it wants to protect its assets. It is suitable for sole proprietors or small scale businesses that can retain non-exempt assets and repay the creditors with the aid of a repayment plot.

It is advisable that you contact a bankruptcy attorney when you’re left with no other options to repay debts. Depending on the financial shape up, a lawyer can aid you to choose the most suitable one among the different chapters/types of bankruptcy.

With the aid of a bankruptcy lawyer, at initially, you need to file a petition to the court that includes a list of your creditors and how much you or your business owes to them. Then, a trustee is appointed by the bankruptcy court after it approves your petition. The trustee is responsible to administer the entire administer till you repay or make discharge from your debts.

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