2 Types of Bankruptcy You Need To Know

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Most people will struggle with their finances at some point, and some will face tougher decisions. No one wants to think about filing for bankruptcy, but it can happen to anyone. If you lose your job and don’t have the savings to cover your expenses, you may have to declare bankruptcy to pay your bills. But if you do file, make sure you work with a bankruptcy attorney Howard County MD or elsewhere.

  1. Chapter 7

Chapter 7 bankruptcy is a personal bankruptcy that involves liquidating all of your assets. Liquidation can involve selling your home, car and other expensive belongings to help pay off your debts. However, you don’t always have to sell your bigger investments. If you don’t own property that’s considered expensive enough, you won’t have to sell it. You can qualify for this type of bankruptcy as an individual or as a business, and it’s one of the most common types of bankruptcy that people declare. Before you file for bankruptcy, talk to a lawyer to make sure this is the best option. If not, you can move on to another type.

  1. Chapter 13

The second most common type of bankruptcy is Chapter 13, and it involves reorganizing your finances to help pay off debt. You can qualify for it if your unsecured debt is less than $419,275 and your secured debt is less than $1,257,850. With this bankruptcy, you don’t risk losing your assets, but you will have to pay your lenders a certain amount based on your assets’ value. It will take a few years to pay off your debt, while Chapter 7 can be over in a few months. You also need to be an individual or a sole proprietor to qualify for this bankruptcy type.

Both Chapter 7 and Chapter 13 bankruptcy can change your life significantly. But they can both help you get the financial relief you need. Just remember to work with a lawyer to choose the right one for you.