Choosing which type of bankruptcy is right for you is never easy. Bankruptcy is a difficult ordeal no matter which type you decide to file. In some cases, however, bankruptcy is inevitable, yet it gives you the ability to survive your economic crisis. The available options are far from pleasant, yet they ultimately offer the transition to a recovered future. Deciding the type that's best for you is the first step to a solution.
Chapter 7 Bankruptcy
This type of bankruptcy liquidates your assets in the process of paying off creditors. You may have your house or car repossessed, although you may be allowed to keep some property in certain cases. Chapter 7 is ideal for people with little to no assets, since it allows them to pay their debt without losing much. Individuals with many assets should check to see if they'd qualify for Chapter 13, as this will allow them to maintain those assets in most circumstances.
Chapter 11 Bankruptcy
This type of bankruptcy is used by businesses to restructure debt without losing their company. Filing this type enables a business to continue operation throughout bankruptcy proceedings. Once this chapter has been filed, all creditors attempts to recover the debt must halt so the business can form a plan in which to get out of debt. Creditors can contest the plan if they feel they'd gain more through liquidation. In the end, the decision rests in the hands of a judge. He or she will prepare a prepayment plan to his or her discretion.
Chapter 13 Bankruptcy
This option allows an individual the opportunity to pay back debt without losing assets. A repayment plan must be filed, which the creditors may challenge. In the end, a judge decides if the plan is in the best interests of the creditors. If they'd fare better under a Chapter 7 liquidation, your request will likely be denied. This option is the best way to keep most of your assets, but you need a compelling plan.
A serious solution to serious financial difficulties, bankruptcy should always be considered under the consultation of an Orange County bankruptcy attorney. He or she can help you find the path that is in your best interests.