3 Types of Bankruptcy and What They Mean to You
Bankruptcy can be a scary thing. In fact, due to the recent recession, we’ve seen a lot of bankruptcy cases in claims over the last few years to a decade than ever before. While in many cases bankruptcy can alleviate debt, such as in a Chapter 7 case, it should be a last resort. Individuals looking to file for bankruptcy should first discuss this with a financial advisor or counselor prior to consulting with a bankruptcy attorney.
How does bankruptcy work?
There are various forms of bankruptcy, and each one is handled differently in each state. In the state of Florida, there are several different types of bankruptcy: Chapter 7, Chapter 11, and Chapter 13.
Chapter 7 Bankruptcy
In a Chapter 7 case or liquidation proceeding, most of an individual’s or organization’s debts are alleviated. However, it doesn’t end there. In order to alleviate debt, a trustee is needed to liquidate all non-exempt assets. In the state of Florida, what qualifies as a non-exempt asset in a Chapter 7 liquidation proceeding is often broad and requires the assistance of an experienced bankruptcy attorney. A professional, qualified, and licensed attorney can assist an individual or organization with this during an initial consultation and interview.
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However, one thing to consider is that not all debts are alleviated in a Chapter 7 bankruptcy. For example, if an individual wishes to claim Chapter 7 bankruptcy, but wishes to keep their home or a car, then the individual will be expected to continue to make payments. A licensed and professional attorney should also take the time to explain that individuals who wish to file Chapter 7 bankruptcy will be required to take and pass a means test.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is a little less harsh and strict than a Chapter 7 bankruptcy. With Chapter 13 bankruptcy, individuals and organizations are put on a three to five-year repayment plan and schedule to repay delinquent debts. However, often times this involves an individual having enough of an income to be able to qualify for this avenue, and to be able to continue to make payments. This is also discussed and described thoroughly with a qualified and licensed attorney when he or she talks with an individual or organization about their bankruptcy situation.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy cases and proceedings typically involve organizations, but can involve individuals as well, and who typically have substantial debt that doesn’t qualify them for a Chapter 7 or Chapter 13 bankruptcy action. A Chapter 11 bankruptcy case provides temporary relief from pre-bankruptcy debts while also organizing a plan to restructure debt by making additional payments. This bankruptcy situation also helps reduce secured debts to their value, such as property, vehicle, and so on.
Professional and Qualified Bankruptcy Attorney
All in all, each bankruptcy situation can be challenging. This is why it’s helpful to count on a professional and qualified attorney such as the law office of Kelley, Fulton & Kaplan. Kelley and Fulton specialize in bankruptcy and foreclosure proceedings. We understand that these situations are difficult, stressful, and challenging for individuals and organizations. No one likes to see these situations occur. However, with the law office of Kelley, Fulton & Kaplan on their side, they are in good hands and will be well-represented. Contact our office today at 561-264-6850 for a free, no-obligation consultation to discuss a potential bankruptcy situation as well as the “means test”, as described above.