Do You Need To File Bankruptcy?
Do you need to file bankruptcy? And if you do, how do you know which Chapter of Bankruptcy to file under or which one you qualify for?
Which chapter is right for you?
Ultimately, the answer to this is to have a comprehensive consultation with an experienced bankruptcy attorney, because it is a very complex analysis which takes into account a lot of different factors.
However, this page provides a basic road map to help in making your determination on where to at least look to determine if you need to file bankruptcy and, if so, under which bankruptcy chapter.
More specific information can be found on my individual Chapter pages listed below:
Which Bankruptcy Chapter is Best?
A. Are you a corporation or partnership? If so, your only options are Chapter 7 or Chapter 11. See my business bankruptcy page for more information on options.
B. Are you an individual or married couple? If so, any chapter may work for you depending on your circumstances and you should review each Chapter or schedule a consultation to have your options evaluated and explained.
Chapter 7 can be used by individuals or businesses, but accomplishes different things for each. Individuals can discharge their debts in a Chapter 7, but corporations cannot.
In general, Chapter 7 is the least expensive and quickest bankruptcy. It allows you to discharge your debts (those that are dischargeable) without doing any repayment. The risks and problems with Chapter 7 are:
1. While it is usually not an issue, in some cases your assets may be at risk, depending on their value and whether you have enough exemptions available to protect them.
2. You may not be eligible for Chapter 7 if your income presently, or for the 6 months prior to filing is too high.
See my page on Chapter 7 for more details and information
Chapter 13 does everything a Chapter 7 does, but gives more options. The tradeoff is that it is more expensive and time consuming. In Chapter 13 you can:
1. Keep all your assets
2. Remove certain liens against property
3. Catch up on past due payments on mortgages
and much more.
The “tradeoff” in a Chapter 13 is that you must do a repayment plan over 36-60 months. The amount of the monthly payment will depend on a number of factors, including your income and the non-exempt equity in your assets.
See my page on Chapter 13 for more details and information.
Chapter 11 was designed for businesses, but individuals can (and sometimes must) file under this chapter. Chapter 11 is very involved and expensive, but offers a lot of flexibility and options. In Chapter 11, like in Chapter 13, you have to propose a repayment plan based on your income and other factors, but unlike in Chapter 13 your creditors in a Chapter 11 case get to vote for or against your Plan of Repayment.
Chapter 11 may be necessary for individuals who don’t meet the strict debt limits for a Chapter 13, which are presently $383,175 for noncontingent, liquidated unsecured debts, and $1,149,525 for noncontingent, secured debts.
See my page on Chapter 11 bankruptcy for more details and information.