Bankruptcy Basics: What Kinds of Bankruptcies Are There?

13 Feb Bankruptcy Basics: What Kinds of Bankruptcies Are There?

What Kinds of Bankruptcy Are There?

There are two main types of consumer bankruptcy: Chapter 7 and Chapter 13. (Two other chapters, Chapter 11 and Chapter 12, apply to corporations and people who don’t qualify for a Chapter 13, and to family farmers, while the rarely used Chapter 9 and Chapter 15 apply to municipal and international cases.)

Chapter 7 is what most people think of when they think of bankruptcy. All of the debtor’s assets—with the exception of exempt items or assets with no equity—can be sold and the proceeds are distributed among the creditors. A typical Chapter 7 bankruptcy will last about four months from filing to discharge.

Chapter 13 provides a way for you to pay back your creditors, in whole or in part, usually over five years. You must have less than $307,675 in unsecured debt (such as credit cards and doctor’s bills) and less than $922,975 in secured debt (such as mortgages and car loans) to qualify for Chapter 13. Due to the Court-approved payment plan, a Chapter 13 bankruptcy will usually last five years, although attorney involvement usually ends after about four months. In many cases, no interest will be paid on the amounts being repaid through the Chapter 13 Plan, you pay your unsecured creditors only pennies on the dollar, and you keep all of your assets.

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Brett Weiss, a senior partner at The Weiss Law Group, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11, and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his colleague, Daniel Press, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the previous Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute and the Bankruptcy Bar Association of Maryland. He has received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, the United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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