Understanding The Three Main Chapters

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy may be an option if there is no possibility of paying your debt. There are restrictions as to who may file this type of bankruptcy, as it includes the "discharge" of debts. This means that a large portion of any debt owed will be completely discharged – you will no longer owe the creditors.

There are certain types of debt that cannot be discharged in a Chapter 7 bankruptcy such as child support, recent taxes and student loans. Your income must be below a certain level to qualify for Chapter 7 bankruptcy, and you will need to provide a "means test" to determine whether you qualify. It is crucial that you get legal assistance when filing your means test, as those who file it incorrectly may lose the opportunity to discharge their debts through a Chapter 7 bankruptcy filing.

Chapter 13 Bankruptcy

When an individual is employed and making a paycheck, including being self-employed, and wishes to protect their assets, a Chapter 13 bankruptcy filing may be the best option. This legal action stops all foreclosure proceedings, and a debt restructuring is done which usually gives the individual the opportunity to pay off back debt over a 3- to 5-year period. This is often the best legal action for those who wish to keep their homes and have a steady income. It also provides more protection for a co-signer on your home mortgage.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is a business reorganization that provides troubled businesses with the opportunity to restructure their debt and get on with focusing on making a profit instead of dealing with creditors. The business keeps their assets and is able to continue to operate. Some outstanding debts may be relieved if unfeasible, and others will be paid over time.

A debt restructuring makes operating your business possible. You lose some ability to make business decisions. For example, if you were to decide to liquidate business assets, you likely would need a court's approval before moving forward. This type of bankruptcy filing can be of great service to those who had bad business decisions in the past that led to unmanageable debt. It gives them an opportunity to move forward and become profitable again.

We are a debt relief agency pursuant to Federal Law S524 of Title 11 of the US Code. The Law Offices of Joseph M. Tosti provides assistance and helps people file for bankruptcy relief under the United States Bankruptcy Code.