Types of Personal Bankruptcy
When it comes to individuals, as opposed to businesses, there are two common kinds of bankruptcy: Chapter 7 and Chapter 13. Below is a brief description of how each kind works:
Chapter 7: This type of bankruptcy basically liquidates your assets in order to pay your lenders. Some assets-- typically including part of the equity in your home and vehicle, personal items, clothing, tools needed for your work, 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 liquidated by a trustee selected by the bankruptcy court and the proceeds will then be distributed to your lenders. Non-exempt assets can consist of property (aside 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 procedure, most of your debts will be cleared and you will no longer be under any responsibility to pay them off. However, particular debts, like student loans, child support, and taxes, can not be dismissed.4 Chapter 7 is usually chosen by consumers with lower income and few assets.
Chapter 13: In this type of bankruptcy, you are allowed to keep your assets, but have to agree to pay back your debts over a specified period of three to five years. The trustee collects your repayments and distributes them to lenders. Chapter 13 bankruptcy is usually chosen by consumers who wish to keep their non-exempt property intact or buy time against repossessions or property seizures.
For More Information About Personal Bankruptcy in Fountain Valley, California, Contact Thomas K. McKnight LLP At (800) 466-7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!