What Are The Diffrent Types Of Bankruptcy?
Bankruptcy is a legal state where an individual or entities are unable to repay debts that they owe the creditor. Bankruptcy is a complicated process depending with the nature of the bankruptcy. In the United States of America, bankruptcy may differ from state to state but the laws and steps are the same. Parties involved in a bankruptcy case are the creditor and the debtor. A creditor is the person that is owed money by the debtor. The creditor may be a business or organization claiming property. The person that owes the creditor money is called a debtor. In this state, the debtor may be a business or an individual.
We have two types of debts that the debtor can owe a creditor unsecured and secured debts. Unsecured debts are. While secured have property tied to the debt is when creditor has property tied to the loan offered to the debtor. In the case the debtor is unable to pay the loan, the creditor will own the property tied to the loan.
In the United States of the America, their four types of bankruptcy named in their respective chapters. When filing for bankruptcy, some factors may determine the nature of the bankruptcy. These factors include whether you are a business or an individual. The following are the type of bankruptcy that Rapa Law Office P.C. deals with:
In Chapter 7, the creditor sells off the assets kept by the debtor so that the creditor can repay him or herself to the fullest of the debt. In other words, this is called liquidation bankruptcy or straight bankruptcy.
Chapter 13 this one of the most commonly used bankruptcy. In chapter 13 on liquidation is involved as in chapter 7. In chapter 13, the debtor usually has the right to keep all the property whether exempt or not. Unlike in chapter 7 chapter 13 is a bit complicated
In conclusion, bankruptcy is sometimes stressful to the party which has filed it since it involves losing your property. It is advisable to get a good legal representation in a court of law. A good legal representative will take time to explain what you are probably to face.