Are There Specific Conditions For Bankruptcy Protection?
If you’re considering bankruptcy in Missouri, it’s vital that you consider all your options before making your decision. Bankruptcy protection can be a viable way to get your finances back on track, but it doesn’t come without its consequences. Here’s everything you need to know about bankruptcy protection and how Groce & DeArmon can help you make an informed decision.
What is Bankruptcy Protection?
When a person or a business is unable to pay back their debts in full, they may file for bankruptcy. The federal laws governing bankruptcy were created to provide individuals and business entities with a solution and a way to restructure their debt, with the goal of paying back their debt and moving onward with their business or personal finances.
Types of Bankruptcy and Conditions
There are several different types of bankruptcy protection and depending on the state in which a person files, the conditions will vary. In some instances, when a person files for bankruptcy protection, their creditors will not be allowed to collect any of their previously owed debt. In other cases, the individual’s debt will be restructured, and the person will continue with repayment in a way that is more manageable for their financial situation.
Overall, there are six different kinds of bankruptcy, each with their own conditions.
- Chapter 7 bankruptcy is what most individuals file. It allows them to liquidate all their assets to pay off their debt over a period of three to five months. In most cases, this will get rid of all of a person’s debt (with a few exceptions). A person can only file under Chapter 7 bankruptcy once every seven years.
- Chapter 9 bankruptcy is a little bit more obscure, and most people will have never heard of it. It’s a type of bankruptcy designed specifically for municipalities, allowing them to reorganize their debts. For example, the city of Detroit, MI filed for Chapter 9 bankruptcy in 2013.
- Chapter 11 bankruptcy is usually filed by businesses. It allows them to continue functioning while they reorganize their debt.
- Chapter 12 bankruptcy is only available to family farmers or family fisherman. It gives them the opportunity to restructure their debts to avoid liquidation or foreclosure. Chapter 12 bankruptcy protection is very similar to Chapter 13 bankruptcy, but it provides more benefits to those filing.
- Chapter 13 bankruptcy gives individuals the opportunity to come up with a plan to repay their debts over a period of three to five years. With Chapter 13 bankruptcy, individuals will still be required to pay some debts such as student loans or a mortgage lien. A person may file for Chapter 13 bankruptcy repeatedly if necessary, but each filing will appear on their credit report. Additionally, declaring Chapter 13 bankruptcy now makes it more difficult to file under Chapter 7 bankruptcy later.
- Chapter 15 bankruptcy is designed to provide cooperation between U.S. courts and foreign courts in regards to international bankruptcies. It also reduces the risk for stakeholders and creditors of international corporations.
Chapter 7 bankruptcy and Chapter 11 bankruptcy are by far the most common, but it’s still very important that you consult with legal aid before making a decision about your bankruptcy status. At the law firm of Groce & DeArmon, we can help you make an informed decision about the repayment of your debt so you can feel confident that you are doing what is best for yourself and your family. Please call our bankruptcy lawyer today to schedule a consultation.