Are Consumer Bankruptcy and Personal Bankruptcy the Same Thing?

When an individual debtor — as opposed to a business debtor — is considering the possibility of filing for bankruptcy, there are a number of terms that can be used to describe the type of bankruptcy case. For a person who is contemplating bankruptcy, understanding when terms overlap and when they are distinct can be confusing, and the use of various terms can appear to complicate the overall bankruptcy process. While the bankruptcy process and U.S. bankruptcy law are, indeed, complex, our Oak Park bankruptcy attorneys can provide you with clarification concerning consumer bankruptcy or personal bankruptcy in Illinois. Consider the following information, and do not hesitate to reach out to our firm if we can answer any questions about getting started on a consumer bankruptcy case.

Personal Bankruptcy, Consumer Bankruptcy, and Individual Bankruptcy are Interchangeable Terms

Consumers are often confused about the different uses of the terms “personal bankruptcy,” “consumer bankruptcy,” and “individual bankruptcy,” wondering if these are three separate and distinct terms or if they are interchangeable. The first thing to know is that these terms are, in general, used interchangeably. If you are an individual or a consumer, you will be filing for personal bankruptcy as opposed to business bankruptcy. But you might also see the use of the term consumer bankruptcy or individual bankruptcy. In effect, all of these will likely mean the same thing for you: that you, individually, are filing for bankruptcy in relation to your personal debts rather than filing for bankruptcy as a business entity with business debts.

Of course, if you own a small business that is structured as a sole proprietorship, it is important to know that you and your business are not two distinct legal entities for financial purposes. Accordingly, if you have a sole proprietorship and want to file for business bankruptcy, you will be filing for personal (or individual or consumer) bankruptcy. Likewise, if you own a sole proprietorship and want to file for personal bankruptcy, your business assets and debts will also become part of the bankruptcy case.

Different Types of Personal, Consumer, or Individual Bankruptcy

Within the category of personal bankruptcy (or consumer or individual bankruptcy), there are different types of bankruptcy filings. Most often, consumers will file for one of the following two types of bankruptcy:

  • Chapter 7 bankruptcy (liquidation bankruptcy); or
  • Chapter 13 bankruptcy (reorganization bankruptcy).

When an individual files for either of the types of bankruptcy, it can be described as a personal bankruptcy, consumer bankruptcy, or individual bankruptcy filing. If an individual’s debt load is too high to qualify for Chapter 13 bankruptcy, they may also file for Chapter 11 bankruptcy, even though this type of bankruptcy is typically filed by businesses. In those circumstances, a Chapter 11 case might also be described as a consumer or personal bankruptcy.

Contact an Oak Park Consumer Bankruptcy Attorney

The personal bankruptcy process is complicated, but one of our Oak Park bankruptcy lawyers can help. Do not hesitate to reach out if you have questions or if you are ready to begin working on your bankruptcy petition. Contact the Emerson Law Firm for more information.



See Related Blog Posts:

Bankruptcy Code and Automatic Stay Apply to Federally Recognized Indian Tribes

Common Bankruptcy Exemptions to Know About




Comments

Post a Comment

Popular posts from this blog

Phantom Debt Collection Scams on the Rise in Illinois

Have you been contacted by a person claiming to be a debt collector who is seeking to recover a debt you allegedly owe? If so, you are not alone. According to a recent report from CBS Chicago , such parties claiming to be debt collectors are on the rise, and they are scamming Chicago-area residents. These alleged debt collectors are part of schemes known as “phantom debt collection scams,” since they involve the attempt to collect on a debt that the consumer does not actually owe. How can you avoid becoming a victim in a debt-collection scam ? What should you do if you have been targeted by a fake debt collector? How Do Phantom Debt Collection Scams Work? Now, you might be thinking to yourself: I would never agree to make payment on a debt that I did not owe. But the scam is not always that simple. Parties at the center of debt-collection scams often target consumers who do actually owe debts (to someone or to some entity), and they prey on the fact that these c...
Read more

Payday Lending and Predatory Lenders in Illinois

If you are in substantial debt in the Chicago area and are living in a paycheck-to-paycheck cycle, you may have taken out a payday loan to make ends meet. While payday lending is illegal in a number of states due to the predatory nature of these loans, it remains legal in Illinois. As a result, many debtors in the state have used payday lenders, and far too many of those borrowers cannot repay what they owe. According to a recent article from Progress Illinois , consumers have filed complaints about payday lenders in the state, illuminating a need for federal rules that address harmful lending practices . Predatory Payday Lenders and Protections for Consumers Due to the perceived predatory nature of payday loans, twelve states in the country have banned these lenders from operating completely, according to a fact sheet from loans.org . The states that currently have laws prohibiting payday lenders from operating include Arkansas, Arizona, Connecticut, Georgia, Mary...
Read more

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti...
Read more