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What are the Different Types of Bankruptcy? Typically, when a person declare personal bankruptcy, the individual files under one of 3 chapters: Chapters 7, 11, or 13. Listed below, we go over the various differences between the 3 chapters, and who they typically apply to: Filing under chapter 7 - Chapter 7 is the most common kind of bankruptcy, and is often referred to as "straight bankruptcy." While individuals make up a bulk of Chapter 7 insolvency filings, corporations and collaborations can also file under this chapter.

Unsecured financial obligations are debts that do not have collateral behind them, like personal loans. After you file a petition for Chapter 7 personal bankruptcy, lenders will stop all collection attempts. If the personal bankruptcy is a success, you will be released of your liability for your personal debts. Filing under chapter 11 - Chapter 11 is known as a reorganization insolvency.

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Chapter 11 can be filed with a voluntary petition or an involuntary petition, depending upon who has actually submitted. A voluntary petition means the organization has filed for Chapter 11, while an involuntary petition implies the creditor has filed for Chapter 11 in an attempt to get business to repay its financial obligations.

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However, this can be encompassed approximately 18 months. Your financial obligation payments are prioritized based on the class you have picked for each of your lenders. Filing under chapter 13 - Chapter 13 bankruptcy is also commonly used by people instead of corporations.  cheap affordable bankruptcy lawyer  of personal bankruptcy is a plan to pay back your creditors over a span of 3-5 years, paying your debts to a trustee for dispensation to your financial institutions.

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At the end of this 3-5 years, all staying debts are discharged. The objective of a chapter 13 filing is to secure your properties, while also making your payments to your financial institutions manageable and over a longer amount of time. Generally, when a person declare personal bankruptcy, the individual files under among 3 chapters: Chapters 7, 11, or 13.