Filing for bankruptcy is never a welcome consideration. While it’s something that you’d most certainly want to avoid, life circumstances like illness, injury, and unemployment may cause you to explore your options. The most important thing to know after you contact a bankruptcy lawyer Rockville MD is that there are typically three bankruptcy settlements to choose between. This guide will help you determine which is best for you to put you on the path back to financial stability.
1. Chapter 7
Chapter 7 is a common form of bankruptcy for consumers and businesses. It is available to those who haven’t petitioned to have their debts discharged in the last six to eight years, and have an income lower than the state’s median after their monthly debts are paid. Chapter 7 relieves you of your debts through liquidation. This means that the court has the authority to sell any property deemed to be non-exempt in order to pay your creditors.
2. Chapter 13
Unlike Chapter 7, Chapter 13 bankruptcies are only available to individuals. Most importantly, Chapter 13 restructures your debts into court-mandated payments while allowing you to remain in possession of your property. Rather than eligibility being determined by income, it sets a cutoff amount of cumulative secured and unsecured debts to determine who qualifies. While Chapter 13 does not result in any property liquidation, it does take significantly longer to complete when compared with Chapter 7.
3. Chapter 11
Chapter 11 is a very similar bankruptcy plan to Chapter 13 in that it allows for filers to restructure and repay their debts under the supervision of a court-appointed trustee. The critical difference here is that Chapter 11 removes the income and debt restrictions present in Chapter 7 and Chapter 13. While Chapter 11 is technically available to individuals and businesses alike, it is typically used by larger companies because it is expensive, complex, and lengthy.