The United States Bankruptcy Court allows for several different types, or chapters, of bankruptcy. Each chapter has its own guidelines and qualifications. There are several factors involved in determining which chapter fits your needs.
This is the chapter of bankruptcy most think of when they are looking to file. It is characterized as a liquidation bankruptcy. In a liquidation, your non-exempt assets are seized and sold by the trustee to pay your debts to the fullest extent possible. The remaining portion will be discharged. Many fail to file for Chapter 7 because they falsely believe their clothes, car, and furniture will be taken away. While businesses try to avoid Chapter 7 due to difficulties with continuing business operations, corporations and partnerships are eligible for Chapter 7 just as individuals are.
Chapter 7 bankruptcy will stay on your credit record for 10 years.
This is a common form of bankruptcy used by businesses in order to reorganize. It tends to be the most complex filing but appropriate for businesses and even individuals. The business creates a plan to reorganize and pay off debts. This allows the business to be able to function normally and retain all assets.
Similar to Chapter 13, this form of bankruptcy is specifically for farm owners. The farm owner will still own his own property and continue operating the farm with the aid of a repayment plan.
Chapter 13 is a financial reorganization for individuals. It is the wage earner's plan as the debtor must have a reliable source of income. This income enables the debtor to keep his or her assets and create a repayment plan. The repayment plan lasts from three to five years. After the repayment plan is completed, remaining debts can be discharged.
Chapter 13 bankruptcy remains on your credit record for 7 years.