What are the Different Types of Bankruptcy?April 5, 2012 — 1,060 views
The United States Courts define bankruptcy as the legal procedure for dealing with the debt problems of an individual or business. When an individual or business has fallen so far into debt that there is no other recourse, they will consider filing in order to start fresh. However, there are repercussions for this financial decision and a person should consult with a professional before declaring for one of the five different types of bankruptcy.
Here are the three most common types of bankruptcy filed:
Filing for a this form of bankruptcy will result in all assets liquidated to be distributed amongst creditors - except for nonexempt property such as possibly a home, car, clothing, life insurance, pension and the tools needed to find work. According to FICO, one of the largest and trusted credit reporting agencies, filing Chapter 7 will remain on a person’s report up to 10 years.
This chapter of the bankruptcy code largely deals with a corporation, business or partnership. It can result in the proposal of a plan or reorganization to keep the business up and running allowing them to pay creditors over time. A credit report will show this filing up to 10 years, according to FICO.
Filing under this chapter is reserved for an individual with regular income, who still can not pay their debts on time. A plan of action is created so the person may keep their property, while payments are made to cover the debts over time.