The exponentially growing number of Americans who are unable to pay off their debts has seemingly become an epidemic. Just in 2013 there were around 1,071,932 Americans who filed for multiple different types of bankruptcy. Because each category involves different procedures, it can be confusing to decide which type is best for your needs and whether filing is necessary at all.
The most common form of claim is chapter 7 bankruptcy. The individual who filed is essentially asking the court for their non-exempt assets to be sold by a designated bankruptcy trustee. There is a set agreed-upon amount by the creditors who will be given all the proceeds made from the sale of the assets.
Out of the different types of bankruptcy, the least common filings come in the form of chapter 11 bankruptcies, with only 8,980 claims in 2013. While it is possible for individuals to file for this claim, it is most often used for business entities. The main difference between chapter 7 and 11 bankruptcies is that chapter 11 allows the creditor to act as their own bankruptcy trustee for some responsibilities, otherwise known as a debtor-in-possession.
One important facet that some people overlook is figuring out if filing for bankruptcy is even the right course of action. There are a lot of legal professionals who can offer bankruptcy help in deciding if filing is the best option, through completing and organizing the paperwork required. One consequence that comes with filing a claim is the resulting mark left on a credit score that can last for years; in the case of chapter 7 bankruptcies it remains there for 10 years.
For some people who find themselves in a pile of debt, bankruptcy can be the best way out, but it can sometimes be difficult to know whether it’s the right course of action as well as which chapter of the different types of bankruptcy to pursue. Luckily, legal entities can aid in helping to understand what filing entails, as well as when to file bankruptcy. A quick online search could be the answer to all of your debt questions and problems.