Bankruptcy is a process in which consumers and businesses can eliminate or repay some/all of their debts under the protection of federal bankruptcy court. Bankruptcies can usually be divided into two types – liquidation and reorganization. Chapter 7 bankruptcy falls under the liquidation category. It has this name because the bankruptcy trustee may take & sell (“liquidate”) some property to pay back some of your debt. However, you may keep property that is protected or “exempt” under state law. There are several types of reorganization bankruptcies, but Chapter 13 is most common for consumers. In Chapter 13 bankruptcy, you keep all of your property, but must make monthly payments over three to five years to repay all or some of your debt.Both Chapter 7 and Chapter 13 bankruptcy have many rules — and exceptions to those rules — regarding which debts are covered, who can file, and what property you can and cannot keep.
The Law Offices of Thaniel J. Beinert & Associates can guide you in all aspects of bankruptcy law. We can help you determine if bankruptcy is right for you.