Types of Bankruptcy

Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is a type of reorganization.  In this type of bankruptcy, an individual repays all or a portion of his or her debts. If an individual qualifies and complies with the bankruptcy court’s orders, it can be particularly effective at saving homes from foreclosure and keeping cars from being repossessed. From the date of bankruptcy filing, an individual may expect to be in this type of bankruptcy for 3 -5 years.  Once an individual has completed all payments in the bankruptcy, they may receive their discharge. This documents that an individual has completed his or her repayment plan.  If an individual qualifies and is able to comply with the terms set forth by the court and the Bankruptcy Code, it can pave the way for the road to financial freedom.

Chapter 7 Bankruptcy

A Chapter 7 Bankruptcy is a bankruptcy in which no repayments are necessary. It can be, in essence, the ultimate fresh start. It is particularly good at discharging credit card debts and medical bills. From the date of bankruptcy filing, an individual can expect to be in this type of bankruptcy for 4-6 months. If an individual qualifies for this type of bankruptcy, has completed all the requirements set forth by the Bankruptcy Code and the Court, and waited for the allotted time, that individual may receive his or her discharge. This discharge may take care of all or a portion of an individual’s unsecured debts. If an individual qualifies and is able to comply with the terms set forth by the court and the Bankruptcy Code, it can pave the way for the road to financial freedom.