Since the turn of the century there has been new establishment of bankruptcy laws. These different types offer several avenues in how the bankruptcy will work, how debts will be cleared and who can file the type of bankruptcy. Not every type of bankruptcy is ideal for everyone and it is of utmost importance that you find the right type of bankruptcy when filing, so you can get the most out of the process.

There are 3 common types of bankruptcy:

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common process as it can be filed by individuals or businesses. This type of bankruptcy allows the debts to be wipe clean with little or no repayment.

Under this type of bankruptcy one will see that he can have some properties exempted from selling and everything not exempted is sold to repay debts.

Under this bankruptcy, a person’s debts are cleared.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy can be filed by businesses and individuals. However, this chapter is more skewed to businesses, though.

This type of bankruptcy is suitable for those with a lot of assets and a lot of debt. It is a repayment plan that allows a person or business to repay debts in a way they can afford while also keeping all their assets.

Under this chapter, businesses can still remain run as per normal, which is a very good option for many.

Chapter 13 Bankruptcy

Chapter 13 is more for individuals. It allows a person to keep their assets while repaying their debts and keeping away from common collection methods.

Any type of bankruptcy protect a person or business from the harassment of the creditors. Once bankruptcy is filed creditors must stop all collection processes. Creditors cannot file court charges, send letters to debtors nor to do anything that may harass the debtor.

The choice of what type of bankruptcy to file is really based upon your own financial status. Always look at your assets and debts carefully before you decide. In the end, one should look at clearing your debts without losing all your current assets. In order to best do this you need to look at what property you own that is exempt and if you have any property that is not exempt.

Bankruptcy should not be considered as a way to escape from debt. It should be seen as a way to assist you to restart your life again. Most people flock to file Chapter 7 because the debtor can keep some of their properties. The revised laws have imposed rulings that stops a number of people from filing Chapter 7 because they have the ability to repay debts.

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