Types of Bankruptcy Available to Individuals
Bankruptcy is a legal process that helps individuals or businesses stop or reorganize debt. There are several types of bankruptcy, each with its own unique characteristics and requirements.
Absolution Bankruptcy (Chapter 7)
Chapter 7 bankruptcy, also known as absolute bankruptcy, is the most common type of bankruptcy. It involves liquidating a debtor's non-exempt assets to pay off creditors. The court will typically appoint a trustee to oversee the process.
Absolution Bankruptcy (Chapter 11)
Chapter 11 bankruptcy, also known as reorganization bankruptcy, is used by businesses with complex financial situations. It involves creating a plan to repay creditors over time, while keeping the business operational during that period.
Reorganization Bankruptcy (Chapter 13)
Chapter 13 bankruptcy, also known as wage earner's protection, is designed for individuals with regular income. It involves creating a plan to repay creditors over three years, while keeping the debtor employed or in education/training.