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If you’re struggling with debt, bankruptcy may offer a way to regain financial stability. But not all bankruptcies work the same way. Different types exist for different situations, so it’s important to understand which one fits your needs. Here’s a simple breakdown.
Chapter 7 Bankruptcy: Liquidation
Chapter 7 is the most common type of bankruptcy for individuals. It eliminates most unsecured debts, like credit cards and medical bills, within a few months. In some cases, the bankruptcy trustee may sell non-exempt assets to pay creditors, but many assets are protected under Kentucky bankruptcy exemptions. This is a great option if you have limited income and need a fresh start.
Chapter 13 Bankruptcy: Repayment Plan
Chapter 13 allows you to keep your property while repaying your debts over three to five years. It’s ideal for those who:
- Are behind on mortgage or car payments and want to avoid foreclosure or repossession.
- Have a steady income but need help reorganizing their debt.
- Want to protect non-exempt assets that might be lost in Chapter 7.
Once your repayment plan is completed, remaining eligible debts may be discharged.
Chapter 11 Bankruptcy: Business Reorganization
Chapter 11 is typically for businesses or individuals with significant assets and debts. It allows companies to continue operating while restructuring their debts under court supervision. Though complex and costly, it helps businesses regain profitability instead of shutting down.
Chapter 12 Bankruptcy: For Family Farmers and Fishermen
Designed specifically for family farmers and commercial fishermen, Chapter 12 provides a structured repayment plan similar to Chapter 13. It recognizes the unique financial challenges these professions face and offers flexible repayment terms.
Find Out Which Bankruptcy Is Right for You
Choosing the right type of bankruptcy depends on your financial situation and goals. Dennery Law can help you understand your options and guide you through the process. Call 877-273-1976 or visit our office location to schedule a consultation today.