Are There Different Types Of Bankruptcies?

Yes!  There are two types of bankruptcy cases; Chapter 7 Bankruptcy, Chapter 13 Bankruptcy.

Chapter 7 Bankruptcy

You eliminate most if not all outstanding debt by filing for Chapter 7 Bankruptcy.  This usually consists of forfeiting property to help satisfy those outstanding debts.  But, the good news is as a debtor, you can keep some property that is omitted from being seized during proceedings, called “Exemptions”.

Some unfortunate news regarding property and filing for Chapter 7 is that interest loans such as your car or house will usually always be seized during the process to satisfy those related debts.  If you are behind on payments on items such as these but think you can continue to afford to make the payments, you may want to re-think filing for Chapter 7 Bankruptcy.  Chapter 7, does not prevent the creditors from seizing these properties to pay off your debt.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is a great process to help in reorganizing your outstanding debt and creating an adjusted repayment plan to get you out of debt in a reasonable amount of time.  By filing for Chapter 13, you are showing the court you can and will pay your debts in a period of three to five years.  As long as you continue to make the required payments, creditors can no longer harass you and your property cannot be seized.  The minimum payments usually consist of the minimum monthly payments established under the original debt plus an additional percentage.  If you feel that you have the opportunity to catch up on your debt over a three to five year time period, then Chapter 13 Bankruptcy may be the better choice.

Before considering the path to filing for bankruptcy, you may want to contact your creditors to set up a different payment plan.  Depending on the type of creditor and the amount, they are usually open to working with you and will save you on attorney and court fees.