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What are the different types of personal bankruptcy?

On Behalf of | May 26, 2020 | Firm News |

Personal bankruptcy protection helps people throughout North Dakota and Minnesota find relief from overwhelming debt and stress. Because there are different types of personal bankruptcy, it helps to be familiar with your options so you can determine which is the right fit for your specific situation.

There are two primary types of personal bankruptcy that struggling consumers should be familiar with:

Chapter 7 bankruptcy

Chapter 7 bankruptcy is a liquidation bankruptcy option that allows the filing party to liquidate non-exempt assets to repay creditors and enjoy a fresh financial start. Certain categories of property can be exempted from the liquidation process. In addition, those considering Chapter 7 bankruptcy must pass a “means test” to qualify. In other words, you income and assets must be below a certain amount to qualify for Chapter 7 protections.

Chapter 13 bankruptcy

Chapter 13 bankruptcy is a reorganization bankruptcy that allows the filing party to reorganize their debts and repay them over a manageable period of time, usually 3 to 5 years. At the end of the process, provided the filing party complies with the reorganization plan worked out with the bankruptcy court, they will enjoy a debt discharge. Chapter 13 bankruptcy may also help with foreclosure concerns. Chapter 13 bankruptcy and a repayment plan are best for people who have a reliable source of income.

If you have questions about Chapter 7 or Chapter 13 bankruptcy, talk to an experienced bankruptcy attorney about your options. A bankruptcy attorney can answer your questions and guide you through the process of making a fresh financial start.