Types of Bankruptcy

Types of bankruptcy

Bankruptcy is a relief process given to the insolvent debtors. There are mainly 4 types of bankruptcy and they are……
1.    Chapter 7
2.    Chapter 11
3.    Chapter 12
4.    chapter 13

Chapter 7: Chapter 7 bankruptcy is liquidation bankruptcy. That means if you file chapter 7 bankruptcy then all your non exempt properties will be sold to pay off your debts. This affects your credit score a lot. Your credit score may be dropped by 250 to 300 points and you may not be able to get a loan in coming 5 to 7 years after the bankruptcy chapter 7.

Chapter 11: The process of chapter 11 is a very complex and this type of bankruptcy is filed by the troublesome businesses or Corporations. Though individuals can also seek to file chapter 11 bankruptcy, most people files chapter7 or chapter13 bankruptcy.

Chapter 12: This type of bankruptcy is for farm owners. They can retain the ownership of their property and work out a repayment plan prescribed by the court.

Chapter 13: Chapter13 is most common form of bankruptcy. Under chapter13 bankruptcy you can work out a repayment plan through which you will be able to pay your debts to your creditors. Chapter13 bankruptcy does not affect you credit report much. It will drop your credit score by 120 to 250 points.

The best thing of bankruptcy is the creditor cannot harass you once you have file for bankruptcy. You cannot file bankruptcy on your own. There are certain eligibility criteria that you need to pass to file bankruptcy. The most important thing is that before filling bankruptcy you should consult with an experience attorney.

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