When economic times threaten the stability of your finances, it’s tough to know how to proceed. Do you struggle through the mounting pile of debt or do you file for bankruptcy? If the debt is manageable, hiring a financial adviser could be worth it, but if your accounts are looking to bleak to handle, declaring bankruptcy may ultimately be the best option. There are several different paths here. Generally speaking, Chapter 7 bankruptcy refers to liquidation, while 11 signifies debt reorganization and 13 indicates individual debt restructuring.
Chapter 7 bankruptcy, in more depth, is sometimes called straight bankruptcy. The debtor is exempt from any financial obligations on discharged debts, unless of course the debtor wants to keep an item, such as a house or car. In this scenario the debtor must continue future payments in order to secure certain possessions. However, most student loans and/or taxes won’t be discharged. To qualify for chapter 7 bankruptcy, it’s necessary to take a means test, which determines if your income meets the lower requirement mandated by the new laws.
Chapter 11 bankruptcy was originally intended for larger corporations, since there is no upper limit regarding debt, but nowadays, individuals are filing for chapter 11 frequently. This type of filing will reorganize or restructure any remaining debt over the course of an extended period of time. Chapter 11 bankruptcy filings are highly specialized because they concern massive corporations, limited liability companies or partnerships, thus, only a few law firms practice chapter 11 filings.
While large businesses can apply for chapter 11 bankruptcy, chapter 13 filings only apply to individuals. If the filings are approved, the court will allow the debtor to pay off any remaining debts out of future income over a three to five year period. The most important difference here is that the amount of debt you are obligated to pay back is solely determined by the court. For example, they may waive a large portion of unsecured debts.
If you’re still undecided on filing for bankruptcy, let The Pels Law Firm, LLC, consult with you regarding the best course of action for you and your family. If it’s indeed in your best interest to start the proceedings, then immediately take a means test to see if you qualify for chapter 7 bankruptcy.
The Pels Law Firm, LLC, the Maryland trial lawyers of the year, is the premier law firm and reputed bankruptcy attorney in Maryland and one of the best reviewed firms in the entire country. Their experienced and enormously successful staff will leave no stone unturned – they’ll treat you like family. Your best days are ahead!