Bankruptcy is a tough choice to make. Yet when you are in a very tight financial position and it doesn't look like it is going to get any better, bankruptcy might be the only way out. However, there are many different types of bankruptcy, and not every type will fit your own set of circumstances. A bankruptcy lawyer is your best bet to determining which types of bankruptcy will work for you.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy is a sort of win-win situation. You are required to liquidate whatever assets you have and pay your creditors what you can. Whatever debt is left your creditors agree to dismiss and the courts discharge the remainder. If you own no assets that can be liquidated, all of your qualifying debts are discharged. Some individuals like this type of bankruptcy because they can feel like they made a really valiant effort to still pay off some of their debts while the rest of their crushing debt load is erased. 

Chapter 9 Bankruptcy

A Chapter 9 bankruptcy doesn't apply to individuals. It only applies to municipalities who are unable to pay their collective bargaining debts or their contractors. Cities who don't want to raise taxes on their citizens but who lack the funds to pay city-related debts may resort to a Chapter 9. In many states, these cities can only file a Chapter 9 IF they have permission from the state government.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is usually just for businesses only. However, if you invested in your business and rolled a lot of personal funds into it, you can use the Chapter 11 in conjunction with either a Chapter 7 or Chapter 13. Business owners who don't want to give up their business entirely file a Chapter 11 so they can continue "business as usual" while the debts from the business are settled through the courts. 

Chapter 12 Bankruptcy

This type of bankruptcy only applies to you if you make your living from farming or commercial fishing. It has much higher debt ceilings and allows many farmers and fishermen temporary relief in situations where their crops, animals, or daily catches cannot pay their bills. If you fall into one of these two specialty categories because of your career choice, then you can file a Chapter 12. 

Chapter 13 Bankruptcy

Even though it's a bankruptcy, you are actually formulating a plan to repay most of your debts through the Chapter 13. It's an attempt to remain in good standing with your creditors by being willing to pay whatever you can at a decreased amount or decreased interest. In many cases, your monthly payments are drastically reduced, and your interest is null until you can get back on your feet again. 

Chapter 15 Bankruptcy

A Chapter 15 is only for cases where overseas businesses need financial relief. Your company has to have a foothold here in the United States as well as in another country. If your company is having a huge financial crisis on a global and international scale, you can file a Chapter 15. However, you should be made aware that this raises your bankruptcy to that of the federal courts and it is at the federal courts' discretion to choose to provide your company with relief in regard to your property outside of the U.S.. 

Pros and Cons of Filing for Bankruptcy

Some types of bankruptcy allow you to restructure your debt while still paying it off. The pro to this is that you maintain a level of personal responsibility that reflects positively on your credit report. The con is that you still have debts to pay every month and you need to pay them because you can't file for bankruptcy again for another 7 years. 

Other types of bankruptcy allow you to discharge most, if not all, of your debts. The pro here is that you don't have to worry about these debts or bills ever again. The con is that it hits your credit report hard, and creditors are not likely to extend any amount of credit to you for anything for at least three or more years. 

Having to make a choice about filing for bankruptcy should be thoroughly thought out and discussed with anyone and everyone involved. If you are married, your spouse's credit can also be negatively impacted by your bankruptcy, even if you are not including any of your spouse's debts in the process. It is often better to find a way to consolidate your debts rather than file for bankruptcy, but if you can't get a loan to consolidate, then bankruptcy is an option. 



Hire the Right Lawyer

Don't let the stigmas surrounding bankruptcy prevent you from filing. Sometimes bankruptcy is just the necessary and right way out. Hire the right lawyer from John Goetz Law PLC and get started today.