What Types of Bankruptcy Can Be Filed?

Life does not always go according to plan. You may lose your job through no fault of your own, you may be forced to deal with the costs of a medical emergency or compelled to take in an ailing relative. Any of these contingencies can put a tremendous strain on your finances. It can lead you to the point at which you cannot pay your bills.

Bankruptcy is a legal remedy for people in financial distress. Filing for bankruptcy will protect you from aggressive creditors and collection agencies, and it will allow you to rebuild your financial life. A Henrico bankruptcy lawyer can help.

The 2 Main Types of Bankruptcy

Chapter 13 and Chapter 7 are the 2 main types of bankruptcy filed by most people. Here are the differences between the two:

1. Chapter 13

A Chapter 13 bankruptcy is essentially a repayment plan. Once you have filed, a trustee will be assigned to oversee your case. You will need to negotiate a plan that will include paying a portion of the amount you owe to unsecured creditors each month. This will be done through the trustee.

2. Chapter 7

This is a liquidation bankruptcy. A trustee is appointed by the court to oversee the case. The trustee will identify assets that can be sold to pay unsecured debts. In a Chapter 7 no-asset case, you will be able to keep all your property and get rid of thousands of dollars in unsecured debts. However, your ability to secure a loan or line of credit will be severely restricted for the next 5 to 7 years.

You need not fall into despair because of a bankruptcy. In fact, it may be the best way to relieve yourself of the stress of trying to pay money you do not have. If you are in financial distress, you should contact a Henrico bankruptcy lawyer to review your options.