Get to Know the Four Chapters before Filing Bankruptcy

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Filing bankruptcy is a serious move, and one that should not be done without first researching. You should be aware of the four chapters of bankruptcy.

Chapter 7 is the most common according to BankruptcyHome.com. Though Chapter 7 is a form of liquidation, your debt will be wiped clean. This could allow you to start over financially.

Chapter 13 requires debtors to develop a payment plan
to pay their creditors within the next three to five years, according to BankrupctyLawInformation.com. This is not the fastest way to be debt-free, but allows you to keep your property.

Similarly, Chapter 11 is close to Chapter 13, as it focuses on reorganization rather than starting over.Chapter 13 is referred to as corporate bankruptcy, as it allows a business to function while repaying debts, according to the Administrative Office of the U.S. Courts.

Chapter 12 is a more specific, exclusive form of bankruptcy. If you are either a fisherman or family farmer, you can use Chapter 12. According to HowStuffWorks, this is similar to Chapter 13, but it is specific to farmers and fishermen.

No matter what your case is you should contact local bankruptcy lawyers to determine which, if any, chapters for which you are eligible. A bankruptcy lawyer will help you figure out which chapter is best for you.

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