Filing for bankruptcy is a legal process that provides individuals and businesses with financial relief when they are unable to repay their debts. While bankruptcy is often seen as a last resort, it can be a valuable tool for those facing overwhelming financial difficulties. Bankruptcy attorney services from the Law Offices of Thomas J. Minotti, P.C., in Lagrangeville, NY, can help you understand the different types of bankruptcy so you can make an informed decision about your options.
Understanding the Different Types of Bankruptcy
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as "fresh start bankruptcy," is the most common type of bankruptcy filed by individuals and businesses. In Chapter 7, a trustee is appointed to gather and sell the debtor's non-exempt assets to repay creditors. The remaining eligible debts are then discharged, relieving the debtor of any further responsibility for those debts.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, often referred to as "reorganization bankruptcy" or a "wage earner's plan," is designed for individuals with a steady income who want to repay their debts over time. In Chapter 13, the debtor proposes a repayment plan, typically lasting three to five years. Chapter 13 allows individuals to catch up on missed mortgage or car payments while keeping their property.
Chapter 11 Bankruptcy
Chapter 11 provides businesses with an opportunity to develop a plan to reorganize their finances, reduce debt, and negotiate with creditors. This type of bankruptcy can be complex and expensive due to the involvement of multiple stakeholders, but it offers a chance for businesses to regain financial stability and continue their operations.
Chapter 12 Bankruptcy
Chapter 12 bankruptcy is specifically designed for family farmers and fishermen who have regular annual income. This chapter enables them to reorganize their debts and create a repayment plan, similar to Chapter 13 but is catered to accommodate the unique financial challenges faced by family farmers and fishermen.
Understanding the different types of bankruptcy is crucial in determining the most suitable approach to resolve financial difficulties. If you find yourself in a challenging financial position, contact the Law Offices of Thomas J. Minotti, P.C., for a free case evaluation. We can provide the guidance you need to make informed decisions and pave the way towards a fresh start.