By Evan Vitale
Sometimes, depending on your situation and advice of an attorney, you may feel like there’s no way out other than filing for bankruptcy.
However, bankruptcy isn’t a “one size fits all” situation. There are some other factors that weigh in on your bankruptcy including your debts and assets.
There are three primary forms of personal bankruptcy for an individual: Chapter 7, Chapter 11 and Chapter 13. Here’s a brief explanation of each:
– Chapter 7 bankruptcy protection allows an individual to get rid of most of their debts and wipe the slate clean. However, this form of bankruptcy may include loss of property and, most likely, a lower credit score. In some cases, a Chapter 7 bankruptcy is also referred to a “liquidation” or “straight bankruptcy” in which a debtor’s assets are sold and creditors receive payment.
– Chapter 11 bankruptcy is primarily for businesses, but it could also affect you if you’re the owner and major shareholder in the company. Chapter 11 is intended primarily for the reorganization of businesses with heavy debt. Although it’s uncommon, some individuals may file for Chapter 11 as well.
– Chapter 13 bankruptcy is the most common form of bankruptcy protection for an individual. Here, rather than wiping the slate clean, the individual might be forced to pay off part of the debit. The positive side of this form of bankruptcy allows the individual to keep a home; land; a car and other types of personal property.
Before deciding on bankruptcy, it is best to discuss your personal financial situation include all debts and personal assets with your attorney. It could be, perhaps, that debts can be worked out individually and a payment plan established, which would help you avoid bankruptcy. However, in all bankruptcy matters, it is highly advised to meet with an attorney or law firm specializing in personal debt and bankruptcy.