Need a bankruptcy lawyer in Las Vegas? At Deluca & Associates we are here to assist you during this difficult time. Understanding the different types of bankruptcy is the first step towards filing and moving on with your life. So what are the differences among Chapter 7, Chapter 11 and Chapter 13 bankruptcies?
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is defined as “liquidation.” The most common of bankruptcy filings, those eligible to file for Chapter 7 include married couples, individuals and companies. Choosing to file for Chapter 7 bankruptcy essentially “wipes the financial state clean” in hopes of starting over. An administer or trustee is chosen to sell the debtor’s assets, though this does not mean the debtor will end up with an empty house or business space. Federal and state law allows for exemptions, meaning the debtor is allowed to maintain a primary residence and retain items such as clothing. Following the liquidation of assets, the trustee pays creditors some of the money raised, though not all creditors are paid, with those debts “forgiven.” Filing for Chapter 7 means the debtor cannot file for this type of bankruptcy for another seven years.
Chapter 11 and Chapter 13 Bankruptcy
Chapter 11 and Chapter 13 filings are similar. Chapter 13 is for individuals, as is Chapter 11, though the latter was originally designed for corporations. The main difference between the two is the amount of money the debtor owes. There is no limit to the amount of money owed by debtors filing for Chapter 11. When filing for Chapter 13, a debtor needs steady income, unsecured debt that is less than $269,250 and secured debt less than $807,750. After filing, the debtor appoints a trustee to create a payment plan proposal. It is then up to the court to accept the repayment plan, alter it, or create an entirely new plan. A plan can take three to five years to pay back once decided upon.
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Main photo by Jonathan Kos-Read