Types of Personal Bankruptcy
When it comes to individuals, as opposed to companies, there are two common kinds of bankruptcy: Chapter 7 and Chapter 13. Here is a brief summary of how each type works:
Chapter 7: This type of bankruptcy basically liquidates your assets in order to pay your creditors. Some assets-- generally 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 get 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 might include property (apart from your main 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, the majority of your debts will be cleared 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 kind of bankruptcy, you are allowed to keep your assets, but must agree to repay your debts over a specified period of three to five years. The trustee collects your payments and distributes them to creditors. Chapter 13 bankruptcy is normally chosen by people that wish to retain their non-exempt property intact or buy time against foreclosures or property seizures.
For More Information About Personal Bankruptcy in Newport Beach, California, Contact Thomas K. McKnight LLP At (800) 466 - 7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!