Bankruptcy allows you a fresh start: Discharge Your Debt.
Bankruptcy covers two primary areas … personal, and business. Get out of debt and keep your business operating.
CHAPTER 7, or Liquidation – is called a liquidation because it is the most direct and efficient type of bankruptcy proceeding to dump your debt and keep your exempt property. It involves, “all you own and all you owe”. Some debt obligations are not dischargeable in bankruptcy, such as alimony and child support; some may or may not be dischargeable – like taxes. To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, a corporation or other business entity. Filing a bankruptcy petition automatically suspends most existing legal (civil) actions and is often used to forestall foreclosure or imposition of a judgment against you. The mere filing of a petition in Bankruptcy enjoins, or “stops”, all legal actions against the debtor, immediately! Period!
A filing under CHAPTER 13 – is an adjustment of debts of an individual with regular income, which is for individuals and sole proprietorship businesses to work out a structured relief over time.
It can be used effectively to stop a home foreclosure and auto repossession with payout of arrears over up to 5 years. It stops the IRS and arranges terms to pay out non-dischargeable taxes and discharge others. Keep your car and stop Repossession; or regain possession in some circumstances.
A filing under CHAPTER 11 – allows businesses, and some individuals, to reorganize and restructure to be able to prevent final insolvency. Often there is no trustee, but a “debtor in possession”, who continues to run the business and ultimately present a plan of reorganization. The final plan often requires some reduction to creditors’ debts owed them, or to take payment over a period of time.