Anyone can fall into financial distress. Even those who do everything right can find themselves in trouble. If you become caught in an inescapable fiscal bind, bankruptcy offers a fresh start.
The government recognizes six unique classifications of bankruptcies. Of them, you are most likely to choose between Chapters 7, 11 and 13. Understanding the differences between each is the first step toward securing your future.
Assets get forcibly sold under this agreement, colloquially called liquidation bankruptcy. In exchange, there is a decent chance of having certain financial obligations discharged. Both individuals and businesses have the right to file Chapter 7. Besides being the speediest option, certain types of personal property remain exempt.
Filing Chapter 13 allows you to keep more belongings than if you were to file Chapter 7. You will have an obligation to pay off your debts within a renegotiated timeframe. This period most often stretches between three and five years. Skillful communication is necessary for successful fiscal renegotiations. Consider having an advisor by your side when dealing with representatives.
Struggling companies often select to file Chapter 11. Individual businesspersons may also file for Chapter 11. As with Chapter 13, a repayment plan is part of the deal. The downside is that the process can be slow and expensive. Still, it allows you to keep your doors open, no matter the status of debt restructuring.
Filing for bankruptcy offers a critical lifeline when you are in financial peril. The type you select will have ramifications that last for years to come. Carefully consider all options before making a final decision.