How an Attorney Can Help You Decide Which Bankruptcy Chapter to Choose

Doing research on your own about the various bankruptcy chapters can be confusing without help from an attorney to offer insight. Not only may it not be easy to admit that it is finally time to declare bankruptcy, but it can be challenging to figure out which one to choose. Here, we have gone into brief detail about each bankruptcy chapter as introductory information. To find out more, please contact a law office right away for a consultation.

Chapter 7 Bankruptcy – “Liquidation”

Operating under this chapter means that the debtor requests to the court to discharge existing debt through liquidation of assets. The debtor agrees to having non-exempt property turned over as a form of payment to a bankruptcy trustee. This trustee then must liquidate property and any debts left over are often eradicated. Since what is considered “non-exempt” property can vary based on where you live, we highly encourage people to talk with an attorney for state-specific laws. 

Chapter 9 Bankruptcy – “Municipalities” 

This type of bankruptcy is geared to help municipalities avoid financial ruin, and is only available to municipalities for use as reorganization instead of liquidation. Through Chapter 9 bankruptcy, a municipality can pay off a portion or the entirety of debts overtime. Debts can be settled without much disruption being caused to residents of the area who benefit or use the municipal entity. 

Chapter 11 Bankruptcy – “Business or Individual”

This chapter may be used by businesses or individuals with large assets. Similar to Chapter 8 bankruptcy, this chapter focuses on reorganization of assets and not liquidation. The debtor is still in control of the daily operations of the business, but the court establishes a plan so that some or all of the debt can be paid to creditors over a set period of time. If you aren’t sure whether as an individual you should apply to this bankruptcy chapter, an attorney can provide guidance.

Chapter 12 Bankruptcy – “Fishermen or Farmers”

Chapter 12 was created for very specific use by either farmers or fishermen. It permits debtors who are family farmers or fishermen to pay back their debts over the course of time. This chapter intends to help those who make income through these means, which often includes buying large machinery to assist with the job. 

Chapter 13 Bankruptcy – “Individual Wage Earners” 

Individuals who have a consistent and reliable stream of income but don’t want to liquidate their assets, may find that Chapter 13 bankruptcy is right for them. This chapter enables individuals to keep their property, but must repay back at least a portion of their debts through a repayment plan over a span of usually 3-5 years. For some people, the debts remaining after the repayment plan term are discharged. 

If you are struggling to figure out which bankruptcy chapter to choose, a legal team can provide assistance. Please call a law office today for an initial consultation with a bankruptcy lawyer in Melbourne, FL.

Thanks to the Law Offices of Arcadier, Biggie & Wood for their insight into bankruptcy law and which chapter is best for you to file under.

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