Many people who struggle with an increasing level of unpayable debt will face this critical question: “Should I file for bankruptcy?” Bankruptcy may seem overly drastic, but in many cases, it is the most viable option to come out of a financially stressful situation. Each year in the United States, there are nearly one million individual and corporate bankruptcy cases. Once you decide to go ahead with bankruptcy, the next step is to determine which type of bankruptcy is most suitable for your situation. This article will describe the different types of bankruptcy so that you can make an informed decision about this crucial financial step.
Chapter 7 Bankruptcy
In Florida, Chapter 7 bankruptcy also goes by individual bankruptcy because individuals use it more than businesses. Its advantage lies in its simplicity and a relatively faster process of liquidation. Under Chapter 7 bankruptcy, you will have to submit all your non-exempt assets to a trustee.
Chapter 7 individual bankruptcy requires a means test as a qualification for filing this protection. If the judge in a bankruptcy court believes that you have the means to repay your creditors, they may dismiss your bankruptcy filing, and you might have to switch to Chapter 13 bankruptcy.
Chapter 13 Bankruptcy
Unlike Chapter 7 bankruptcy, a Chapter 13 bankruptcy does not involve immediately discharging part of the debt or turning over your non-exempt assets to a trustee. In Chapter 13 bankruptcy, you must make a financial plan to repay your creditors, at least in part. This plan’s configuration depends on what you can afford to repay over three to five years.
As part of the plan, you will continue to make debt repayments to a trustee, who will, in turn, disburse money to the creditors. While your creditors may raise objections to your plan, they cannot influence it. It is up to the judge whether to accept your debt repayment proposal.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy also goes by corporate bankruptcy because companies use it most often when they run into financial trouble. Chapter 11 bankruptcy allows a debt-ridden business to reorganize and restructure its finances while letting the business survive. Allowances in this type of corporate bankruptcy enable a company to continue its business operations. Here, there are provisions for restructuring debt obligations and renegotiating collective bargaining agreements.
Same as Chapter 13 bankruptcy, a Chapter 11 bankruptcy will allow for the creation of a debt repayment plan. However, in this case, the creditors have the power to accept or reject the proposal. This type can be a more prolonged and complicated bankruptcy process, but it works well for many companies, as they get a renewed opportunity to restore their business.
Consult With an Experienced Florida Bankruptcy Lawyer
Are you asking yourself that dreaded question, “Should I file for bankruptcy?” Stop interrogating yourself and start taking steps toward a new financial future by hiring an experienced and professional bankruptcy lawyer in Florida. At the Law Offices of Patrick L. Cordero, we have over 30 years of experience in bankruptcy, and we can help you navigate the intricacies of bankruptcy law. Call us today at 305-445-4855 or contact us online for a free consultation.