Which Type of Filing Is Right for Me?

Of the six different Chapters, there are four different types generally available to consumers.  These include Chapter 7, 13, 11 and 12.  Almost all cases in the United States are filed under Chapters 7 and 13.  Remember to consult with an experienced lawyer before you make any decision concerning which type of case to file. Below are the four types of consumer bankruptcies that can be considered for those who are unsure of which type of bankruptcy you should be filing.

Chapter 7

Chapter 7 is filed by those who wish to be relieved of most or all legal responsibility for their debt. In exchange, property owned can be sold or liquidated with the proceeds going to each creditor listed in the bankruptcy. All accounts included in this type of bankruptcy will be reduced to zero balances on the consumer’s credit report. These options can be discussed at length during a consultation a debt relief attorney.

When filing this type of bankruptcy, a court-appointed trustee will assess all assets and liquidate or sell them for money. The money is applied to the debt the consumer owes. Sometimes, tax returns (tax refunds that you are entitled to at the time of filing) can be held as an asset for future liquidation; however, some jurisdictions exempt tax returns as an inclusion of assets.

Chapter 11

Chapter 11 is usually filed by businesses and by people whose debts are extremely large. Chapter 11 is more expensive than other types of bankruptcies, and it isn’t a good match for most consumers. This type of proceeding allows the filer to formulate a repayment plan to repay debts. Filers of a Chapter 11 proceeding are allowed to retain their assets. There is generally no debt limits associated with a Chapter 11 case.

Chapter 12

Chapter 12 is for family farmers and fishermen and for ranchers. This type of repayment bankruptcy is for those who are self-employed in these fields. A Chapter 12 case works much like a Chapter 13 proceeding, discussed below.  However, the debt limits for Chapter 12 are much higher, making it an option for farmers, ranchers, or fishermen whose debt exceeds the Chapter 13 debt limits.

Chapter 13

Chapter 13 is a reorganization of debt proceeding. Consumers who file a Chapter 13 repayment bankruptcy will enter into a future payment plan approved by the court. The payment plan is administered by a Chapter 13 trustee appointed by the court. The plan will last from three to five years, and the remaining debt is usually discharged at the end of this plan. Interest payments are usually removed from all accounts and the consumer will not be held legally responsible for them. The repayment plan is based on what the debtor can afford to pay, according to legal standards and guidelines.

Consumers considering filing for one of the above bankruptcies should consult with a San Diego Bankruptcy attorney. It is important to discuss all options before filing a petition for bankruptcy.