Even the most financially responsible individuals and businesses may be forced to consider bankruptcy due to circumstances outside of their control. If handled correctly, bankruptcy is an opportunity to start fresh in the aftermath of financial devastation. If you are considering filing for bankruptcy or thinking of how to protect your rights as a creditor,  but are struggling to find the answers you need, contact Judson Carusone for help.

Chapter 7

Chapter 7 is one of the most common approaches to bankruptcy. It is capable of wiping out most unsecured debts, such as those for medical expenses or credit card bills. However, not everyone can qualify for chapter 7. If you are unsure of your current eligibility for this type of bankruptcy, contact Judson Carusone for advice.

For a secured creditor whose borrowers has filed bankruptcy, the options include recovery of collateral through a motion for relief from stay or entry of a reaffirmation agreement with the debtor.

Chapter 11

Designed primarily for struggling businesses, chapter 11 makes it possible for companies to reorganize. The ultimate goal for these companies is to once again become profitable. Although typically associated with large corporations, chapter 11 is also available for small businesses, as well as high-income individuals who do not qualify for chapter 7 or 13. Those eligible for chapter 7 or 13 rarely choose to file for chapter 11 bankruptcy, as it tends to be a more expensive and time-consuming process. All creditors have a right to vote for or against the debtor’s plan to reorganize and pay creditors. Creditors who get a notice that someone who owes them money has filed a chapter 11 case should consult an attorney right away.

Chapter 12

Established in 1986 as an emergency response to the pressure placed on family farmers due to tightened agricultural credit, chapter 12 is very similar to chapter 13 bankruptcy. This type of bankruptcy is limited to family farmers or fishermen with regular annual income. Debtors allowed to pursue this bankruptcy plan can be individuals, partnerships or corporations. Within ninety days of filing for bankruptcy, those pursuing chapter 12 must propose repayment plans, which typically are similar to chapter 13 plans. Creditors in chapter 12 are included in the plan based on the type of debt, secured or unsecured. Creditors should hire an experienced attorney to monitor the case and review the plan to make sure they are treated properly.

Chapter 13

Those capable of paying back at least some, if not all, their debt by proposing a  repayment plan may have to file chapter 13 bankruptcy. It also allows debtors to keep their property that is more valuable than the amounts protected by usual exemptions available in bankruptcy cases. This is an ideal solution for anyone with a regular paycheck and the desire to retain possession of such assets  that would otherwise be subject to sale in a chapter 7. Creditors in chapter 13 are covered in the plan based on the type of debt, secured or unsecured. Creditors may want to hire an experienced attorney to monitor the case and review the plan to make sure they are treated properly.

Determining Which Type Of Bankruptcy Is Best For Your Situation

The decision to file for bankruptcy is never easy to make. The process can become even more challenging when it comes time to decide which type of bankruptcy best fits your unique needs. For solid advice regarding the various approaches to bankruptcy, look to Judson Carusone of Behrends, Carusone & Covington.