Bankruptcy Facts and Where You Can Get Help

First you need to know what types there are and I am not referring to the particular chapters - yet.  What I am speaking of is whether it is a voluntary or involuntary petition. 

A voluntary petition is a legal proceeding where a debtor voluntarily files a petition for relief from creditors in a federal court.  The debtor's property is placed in the hands of a court appointed trustee, who will then distribute assets to pay debts owed to creditors. Once the petition is filed the debtor becomes protected from collection attempts until such time as the petition is dismissed by the court, a repayment plan has been established or it is discharged (forgiven).

An involuntary petition is when a creditor(s) (this can be as low as one all the way up to as many creditors you have) file a creditor's petition due to nonpayment of your loans/balances.

Below are listings of each one of the current bankruptcy chapters:

Chapter 7

This is known as a liquidation which allows a court-appointed trustee with broad discretionary powers to distribute assets among creditors and arrange interim financing. In general, the trustee represents the interests of the unsecured creditors, or general creditors. If, however, there are no assets, the debt is discharged, and the creditors receive nothing.

Chapter 9

This is a rarely used section of the code, designed for adjustment of debts of a municipality. Also called a municipal reorganization.

Chapter 11

Also called a reorganization normally by a business, allowing the debtor (called a Debtor-In-Possession if no trustee is named) to maintain operating control, while restructuring debts and working out a repayment schedule acceptable to creditors. Creditor loans to Chapter 11 debtors are permitted under certain conditions.

Chapter 12

Here is a provision dealing with agricultural bankruptcies, allows small family-owned farms with debts under $1.5 million to repay obligations based on fair market value of the loan collateral.

Chapter 13

The most common of them all is the debt repayment plan, called a Wage Earner Plan, filed by individuals earning regular income. The debtor files a budget with the court, and agrees to make partial payment (less than 100%) of obligations owed to creditors over a three- to five-year period, normally within three years.

Obviously this is not all there is to the process as well as all the fine details.  I have included a link to my free check sheet that should prove helpful to you. Additionally, your attorney can help you determine which approach is best for your particular situation.  Once you have finalized your course of action, you need to have "Your Guide to PROSPERING after Bankruptcy " for an in-depth look at turning your bankruptcy into abundance.