Bankruptcy is all about taking advantage of your Constitutional right to end all your bad financial relationships while protecting what assets you can in order to make a fresh new financial start. There are a wide range of bankruptcies an individual can take advantage of to protect his or her assets. Here is the bankruptcy spectrum for protecting individual assets.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy is for an individual with an income below the median income for a family the same size living within the same state. If your income is more than the median income, you can still file a Chapter 7 bankruptcy is you can pass the Means Test.
Your assets are protected in a Chapter 7 by state and federal exemption laws when the bankruptcy court appointed trustee liquidates your assets to pay off your unsecured debtors. Normally, these assets are enough to help you and your family with a fresh new financial start over.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is designed for an individual who has an income that surpasses the median income for the same sized family in the state in which you currently live. When you cannot pass the Means Test, this type bankruptcy might be an option for you.
Here, all of your non-exempt assets can be protected as well as your exempt assets. A 3 or 5 year plan is devised to pay all or a portion of your unsecured debts with your monthly disposable income. With a 100% plan, you can virtually keep all of your assets if you desire.
Chapter 12 Bankruptcy
A Chapter 12 bankruptcy is a voluntary bankruptcy designed for farmers and fisherman who make a steady income off their prospective endeavors. This type of bankruptcy allows the debtor to establish a plan to pay off all or part of its unsecured debts over an established period of time.
The non-exempt and exempt assets are protected from the creditors as long as the bankruptcy is in force. There are special exemptions for this type of bankruptcy.
Chapter 11 Bankruptcy
A Chapter 11 bankruptcy is used primarily for an individual in a business, and it is very similar to a Chapter 13. The main difference is that in a Chapter 11, a trustee can run the daily business operations of the business if there has been a cause shown where the debtor should not run the business an longer.
In a Chapter 11 bankruptcy, all the assets remain with the business and under the direction, discretion, and handling by the one currently running the business.
The personal assets of the individual filing a Chapter 11 bankruptcy are protected as long as the bankruptcy is in process and they were not used as secured collateral for starting the business.
The bankruptcy spectrum runs long, and it involves a very complex web of bankruptcy laws. Deciding which bankruptcy is right for you is a complicated decision that may require the help of a bankruptcy lawyer. Let us help you find a bankruptcy attorney in your area.
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