Thomas K. McKnight - Personal Bankruptcy Lawyer in Orange County
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 brief summary of how each kind works:
Chapter 7: This kind of bankruptcy basically liquidates your assets in order to pay your lenders. Some assets-- generally 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 assigned by the bankruptcy court and the proceeds will then be allocated to your creditors. Non-exempt assets may include property (besides 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 process, the majority of your debts will be cleared and you will no longer be under any obligation to pay them off. However, certain debts, like student loans, child support, and taxes, can not be dismissed.4 Chapter 7 is typically chosen by consumers with lower income and few assets.
Chapter 13: In this type of bankruptcy, you are allowed to retain your assets, but need to agree to repay your debts over a specified period of three to five years. The trustee collects your repayments and distributes them to creditors. Chapter 13 bankruptcy is normally chosen by people who wish to keep their non-exempt property intact or buy time against repossessions or property seizures.
For more information about chapter 7 and chapter 13 bankruptcy, or how to file your bankruptcy in Orange County, contact Thomas K McKnight LLP at (800) 466 - 7507 or visit our website at TKMLLP.com for a Free Consultation.