Bankruptcy

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The stress of bills piling up is often what drives individuals to file for bankruptcy. There are limits, however, on how often a bankruptcy can be filed. Generally speaking, it is recommended to consider bankruptcy when you are at risk of losing your property (whether it's your home, car or money in a checking or savings account) or your wages are being garnished. 

 The simplest way to determine whether a Chapter 7 or 13 bankruptcy is best for you is to evaluate whether you have assets, such as a car or home, you want to save from repossession or foreclosure. If yes, a Chapter 13 bankruptcy may be best for you. If, on the other hand, you mainly have unsecured debts, such as credit cards or medical debt, a Chapter 7 bankruptcy may be best for you.   

There are advantages to filing bankruptcy for your business whether you are closing the doors and need to liquidate in a Chapter 7 bankruptcy or if you simply need help reorganizing your debts so that you can continue operating, but more efficiently, in a Chapter 11 bankruptcy. 

In a Chapter 7 bankruptcy, you ask the court to discharge your personal liability on your debts. This means you will no longer owe such debts as credit cards and medical debt. It also means you will not owe anything on a car you financed or a home you mortgaged, however, you will not be able to keep the car or home in a Chapter 7 bankruptcy unless you are otherwise able to keep current with those payments.  

In a Chapter 13 bankruptcy, you enter into a 3- to 5-year repayment plan with your creditors. You make a monthly payment to the bankruptcy trustee that represents your regular payment, such as your car or mortgage payment, plus a portion of your past due payments. In some instances, you may be able to reduce your interest rate and/or reduce the amount of principal owed if the value of the property has decreased since you first purchased it. 

Chapter 11 bankruptcies are primarily for businesses seeking to reorganize, but individuals may seek relief as well.   Under a new law passed last year, certain small businesses may be able to take advantage of electing to file under Subchapter V which offers reduced expenses and fees.