Understanding the differences between the types of bankruptcy that exist is likely the last thing on your mind when you are going through financial hardships. Our bankruptcy lawyers in Rockford, Il want to break down the types of bankruptcy that exist and guide you in the right direction to provide you the help you deserve.
Chapter 7
Chapter 7 bankruptcy, also referred to as “liquidation” or “straight bankruptcy,” is when a debtor’s assets are sold, and creditors receive payment. From there, debtors are then free from their debts. While Chapter 7 bankruptcy allows debtors to essentially start fresh and get rid of most of their debts, it has its negatives as well. For example, you may lose some of your property or your consumer credit score could fall. You must qualify in order to file for Chapter 7 bankruptcy; we can help you determine if you qualify.
Chapter 11
Also referred to as “reorganization” bankruptcy, Chapter 11 bankruptcy is primarily used to help reorganize businesses that have a lot of debt. It is mainly used with corporations, but small businesses also use it as well. In rare situations, consumers may file for Chapter 11. This type of bankruptcy allows debtors to develop a plan on how to be profitable after a bankruptcy case, including things like trimming costs or finding new sources of income, while creditors are held temporarily at bay. Pros of Chapter 11 include more time to file a plan and an opportunity to reorganize while cons include increased costs and an increased amount of time spent on the bankruptcy.
Chapter 12
Relatively new in the world of bankruptcy, Chapter 12 bankruptcy is designed to help “family farmers” and “family fisherman” to restructure their finances in order to avoid liquidation or foreclosure. Our bankruptcy lawyers in Rockford, Il can help you navigate Chapter 12 bankruptcy, as it has very limited application.
Chapter 13
Unlike other types of bankruptcy, Chapter 13 bankruptcy focuses on the reorganization of finances as opposed to getting rid of debt. It requires the debtor to make a monthly payment to a Chapter 13 trustee for a period of 36-60 months. Then, the Trustee will distribute the money to the debtor’s creditors who’ve filed the proper claims.
Bankruptcy is a seemingly complicated topic, but our bankruptcy lawyers in Rockford, Il can help you navigate this stressful time. We offer free consultations, flat fees, and payment plan options.
