Kinds 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 quick summary of how each kind works:
Chapter 7: This type of bankruptcy essentially liquidates your assets in order to pay your lenders. Some assets-- typically consisting of part of the equity in your home and vehicle, personal items, clothing, tools required for your work, pensions, Social Security, and any other public benefits-- are exempt, meaning you get to keep them.
But your remaining, non-exempt assets will be liquidated by a trustee appointed by the bankruptcy court and the proceeds will then be allocated to your creditors. Non-exempt assets may consist of property (other than your primary residence), 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 discharged and you will no longer be under any obligation to pay off them. However, certain debts, like student loans, child support, and taxes, can not be dismissed.4 Chapter 7 is usually chosen by people with lower income and few assets.
Chapter 13: In this kind of bankruptcy, you are permitted 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 payments and distributes them to creditors. Chapter 13 bankruptcy is typically chosen by people who want to retain their non-exempt property intact or buy time against repossessions or property seizures.
For More Information About Personal Bankruptcy in Los Angeles, California, Contact Thomas K. McKnight LLP At (800) 466 - 7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!