Kinds of Personal Bankruptcy
When it comes to individuals, as opposed to companies, there are two typical forms of bankruptcy: Chapter 7 and Chapter 13. Below is a brief description of how each kind works:
Chapter 7: This kind of bankruptcy essentially liquidates your assets in order to pay your creditors. Some assets-- usually 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 are able to keep them.
However your remaining, non-exempt assets will be sold off by a trustee appointed by the bankruptcy court and the proceeds will then be distributed to your lenders. Non-exempt assets can include property (apart from your primary home), recreational vehicles, boats, a second automobile or truck, collectibles or other valuable items, bank accounts, and investment accounts.
At the end of the process, most of your debts will be dismissed and you will no longer be under any obligation to repay them. However, particular debts, like student loans, child support, and taxes, can not be dismissed.4 Chapter 7 is generally chosen by people 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 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 typically chosen by consumers who wish to keep their non-exempt property intact or buy time against foreclosures or property seizures.
For More Information About Personal Bankruptcy in Orange, California, Contact Thomas K. McKnight LLP At (800) 466 - 7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!