There are several types of bankruptcy described in the various chapters of the federal bankruptcy code. The most common types of bankruptcy for individuals are those described in Chapter 7 and Chapter 13.
Chapter 7 bankruptcy (or straight bankruptcy or liquidation) is the most common type of bankruptcy filing. It entails the appointment of a trustee by the court, who sells the debtor’s non-exempt property and assets, the proceeds of which are then allocated to the creditors.
Chapter 13 bankruptcy allows individuals to pay all or part of their debts over three to five years. The debtor may keep his properties while making regular payments to a trustee out of his future earnings, and the trustee pays the creditors with the required payment.
No matter which type of bankruptcy is right for you, it’s important to know what property you can keep under what circumstances, and an experienced legal team can ensure the best outcome for you.