Types of Consumer Bankruptcy

People with financial problems seem to think that there is nowhere to turn for help. That is simply not the case, and one of the many options available to those who are facing financial struggles is the prospect of bankruptcy protection. While most would do almost anything to avoid filing a bankruptcy petition in order to avoid the intangible stigma that some think is attached to this status, the truth is that millions of people have filed for protection from the bankruptcy court in order to get a fresh start on their financial lives and futures.

While the bankruptcy code is an enormous volume of pages that deals with a plethora of issues, consumers who are looking to file for bankruptcy protection generally have two distinct choices available to them. Each of these choices is described below, but in order to determine which option is best for you, contact a bankruptcy attorney as soon as possible to schedule an initial consultation.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy petition is known by many other names, including a 'straight' bankruptcy, a 'liquidation' bankruptcy and the like. These monikers are somewhat accurate, as the process involved with a Chapter 7 bankruptcy is generally straightforward. The petitioner files the proper documents that detail his or her assets and liabilities, and those types of debts that are dischargeable under the bankruptcy code are generally dismissed when the petition is accepted by the bankruptcy trustee. When this happens, the debtor can basically move on and not give the situation another thought.

Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is also known by other names, including the 'wage earner's' bankruptcy, among other names. A Chapter 13 filing is generally more complicated than a Chapter 7 filing, as the debtor and his or her attorney under Chapter 13 must file not only a schedule of assets and liabilities, but also a schedule of payments to be sent to the bankruptcy trustee every month for a period of years which will be disbursed to the respective creditors. This is generally known as a 'plan,' and this plan must be accepted by the bankruptcy trustee, who must decide on whether or not to uphold any objections by a petitioner's creditors.

While bankruptcy does allow an individual a fresh start, any mistakes made with the documentation or during the appearances in order to finalize the petition can be extremely costly in nature. Contact a bankruptcy attorney today to explain your situation and to work with him or her to make the decision that's the best solution for your situation.