How Chapter 13 Reorganizations Affect Online Creditors

When an individual or a business faces difficult financial times, it often becomes necessary to consider filing for bankruptcy protection. In order to assist in selecting the best bankruptcy option for a client, the effective advocate must be aware of and understand the advantages or disadvantages in choosing one bankruptcy selection over another. Generally speaking, bankruptcy allows people who are unable to pay all bills due to get a fresh start by jumping through various procedural obstacles. There are four kinds of bankruptcy protection provided for by statute:

• Chapter 7: known as "straight" bankruptcy or “liquidation.” Chapter 7 requires that a debtor give up property which exceeds certain limits so that the property can be sold to pay creditors.
• Chapter 11: known as a “reorganization.” Chapter 11 is used by businesses and some individual debtors whose debts are very large.
• Chapter 12: is reserved for family farmers.
• Chapter 13: known as a "wage earners plan.” Chapter 13 requires a debtor to file a plan to pay debts (or parts of debts) from current income.

Article Source: http://www.content.onlypunjab.com

This article was drafted by Nick Deleaunt, for the bankruptcy lawyers at Goldstein and Clegg, LLC.

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