Thomas K. McKnight - Personal Bankruptcy Attorney in Tustin, California
Kinds of Personal Bankruptcy
In the case of individuals, as opposed to companies, there are two typical forms of bankruptcy: Chapter 7 and Chapter 13. Below is a brief summary of how each kind works:
Chapter 7: This kind of bankruptcy basically liquidates your assets in order to pay your creditors. Some assets-- usually including part of the equity in your home and vehicle, personal items, clothing, tools needed for your employment, pensions, Social Security, and any other public benefits-- are exempt, meaning you are able to keep them.
However your remaining, non-exempt assets will be sold off by a trustee assigned by the bankruptcy court and the proceeds will then be allocated to your creditors. Non-exempt assets might include property (apart from your primary home), recreational vehicles, boats, a second vehicle or truck, collectibles or other valuable items, bank accounts, and investment accounts.
At the end of the process, the majority of your debts will be discharged and you will no longer be under any responsibility to repay them. However, particular debts, like student loans, child support, and taxes, can not be dismissed.4 Chapter 7 is usually chosen by individuals with lower income and few assets.
Chapter 13: In this form of bankruptcy, you are allowed to retain your assets, but have to agree to pay off your debts over a given period of three to five years. The trustee collects your repayments and distributes them to creditors. Chapter 13 bankruptcy is normally chosen by consumers who wish to retain their non-exempt property intact or buy time against foreclosures or property seizures.
For more information about chapter 7 and chapter 13 bankruptcy, or how to file your bankruptcy in Tustin CA, contact Thomas K McKnight LLP at (800) 466 - 7507 or visit our website at TKMLLP.com for a Free Consultation.