Understanding Bankruptcy Chapters for Individuals

Any individual or consumer in Illinois who is thinking about filing for bankruptcy will find a substantial amount of information about the different types of bankruptcy chapters. Yet much of the information that comes from friends or family members, and even information that can come from certain places on the internet, can be confusing. Indeed, individuals may not fully understand how to show that they are eligible for a particular type of bankruptcy, or even how to determine which types of bankruptcy are possible for individuals (as opposed to businesses). An Oak Park bankruptcy lawyer at our firm can provide you with more information about the different types of bankruptcy that are available for individuals under the U.S. Bankruptcy Code in various circumstances.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a type of liquidation bankruptcy. Individual debtors can sometimes be confused about whether they are eligible to file for Chapter 7 bankruptcy since businesses can also file for Chapter 7 bankruptcy. However, the ways in which this type of bankruptcy works are slightly differently for an individual as opposed to a business. For an individual to be eligible for Chapter 7 bankruptcy, the individual must pass the “means test,” and then all non-exempt assets will be liquidated to pay back creditors. At the end of the bankruptcy case, all eligible debts can be discharged. Chapter 7 bankruptcy is one of the most common types of bankruptcy for individuals.

Chapter 13 Bankruptcy

Chapter 13 is another common type of bankruptcy for individuals. Unlike Chapter 7, Chapter 13 is only for individuals. This is a type of reorganization bankruptcy, which means that the debtor reorganizes debts through a repayment plan designed to last from three to five years. At the end of that period, any debts remaining may be eligible for discharge.

Chapter 11 Bankruptcy

While Chapter 11 is also a reorganization bankruptcy like Chapter 13, it is somewhat akin to Chapter 7 bankruptcy in that either an individual or a business can file for Chapter 11 bankruptcy. Typically, an individual will only file for Chapter 11 bankruptcy if she or he cannot qualify for Chapter 13 due to the amount of debt owed (there are debt limits for Chapter 13). The fees for Chapter 11 are notably higher than for Chapter 13.

Chapter 12 Bankruptcy

Chapter 12 bankruptcy is a specific type of bankruptcy that is only for family farmers or family fishermen, and it can only be filed by someone who fits that category and has a regular annual income. Chapter 12 is also a reorganization bankruptcy, but it has elements that are more favorable to family farmers and fishermen. Given that many family farms are owned by individuals, an individual family farmer may file for Chapter 12 bankruptcy.

Contact Our Oak Park Bankruptcy Lawyers Today

If you have any questions about filing for personal bankruptcy, including your eligibility for bankruptcy or the type of bankruptcy that is appropriate based on your circumstances, one of our experienced Oak Park bankruptcy attorneys can assist you. Do not hesitate to reach out to our firm to learn more about how we can help you with your bankruptcy case and provide you with more information concerning your options for getting your finances back on track. Contact the Emerson Law Firm to learn more about our services.


See Related Blog Posts:

When Should a Consumer File for Chapter 11 Bankruptcy?

How to Get a Loan After Consumer Bankruptcy

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