Thomas K. McKnight - Bankruptcy Service Law Firm in Irvine, CA
Types of Personal Bankruptcy
When it comes to individuals, as opposed to businesses, there are two typical types of bankruptcy: Chapter 7 and Chapter 13. Below is a quick summary 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 automobile, personal items, clothing, tools required 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 sold off by a trustee selected by the bankruptcy court and the proceeds will then be distributed to your creditors. Non-exempt assets may consist of property (aside from your main home), recreational vehicles, boats, a second vehicle or truck, collectibles or various other valuable items, bank accounts, and investment accounts.
At the end of the procedure, the majority of your debts will be cleared and you will no longer be under any obligation to repay them. However, certain debts, like student loans, child support, and taxes, can not be discharged.4 Chapter 7 is typically chosen by individuals with lower income and few assets.
Chapter 13: In this form of bankruptcy, you are allowed to keep your assets, but must agree to repay your debts over a given period of three to five years. The trustee collects your payments and distributes them to lenders. Chapter 13 bankruptcy is typically chosen by individuals who wish to keep 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 Irvine CA, contact Thomas K McKnight LLP at (800) 466 - 7507 or visit our website at TKMLLP.com for a Free Consultation.