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If you are going through a difficult time financially, the worry and stress you face trying to pay your bills each month can be overwhelming. Whether due to an illness and unexpected medical bills, the loss of a job, or just getting in over your head with expenses, financial struggles can be devastating. Bankruptcy law is designed to give individuals a fresh start financially. If you qualify for bankruptcy, it can mean getting your finances back on track and the ability to work toward your ultimate financial goals.

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Types of Bankruptcy

All bankruptcies are governed by federal law regardless of the state in which you live. Under the U.S. Bankruptcy Code, an individual or a business may file bankruptcy under several different Chapters, but commonly, most people file under Chapter 7, Chapter 13, or Chapter 11.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is known as “liquidation bankruptcy” as it clears away most of your unsecured debts without the need to repay your creditors. An individual debtor must qualify to file a Chapter 7 by “passing” the Means Test. The Means Test is designed to determine who has enough income to repay their debts. If it is determined that you have sufficient income, you may not be eligible to file under Chapter 7 and may instead be restricted to filing under Chapter 13.

If you do qualify under Chapter 7, the Automatic Stay will take effect directly after the filing of the petition. The Automatic Stay will stop most creditor action and provide relief from threatened garnishments, lawsuits, and foreclosures and is, therefore, a great benefit to those being harassed by creditors.

Chapter 13 Bankruptcy

Known as the “wage-earners plan,” a Chapter 13 bankruptcy is not a liquidation bankruptcy but is a reorganization designed to allow debtors to repay all, or a portion, of their debts through a repayment plan. Typical repayment plans allow debtors to repay their debts over a period of three to five years.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is a reorganization bankruptcy most commonly utilized by businesses of all types including corporations, partnerships, or sole proprietorships. An important benefit to a debtor business filing under Chapter 11 is a term known as “debtor in possession,” which allows an individual or entity to remain in control of the business throughout the reorganization.

As in a Chapter 7 bankruptcy, those debtors filing for relief under Chapter 11 also enjoy the benefits of the Automatic Stay. As soon as the petition is filed in the bankruptcy court, the automatic stay is invoked to cease all creditor action against the debtor business.

Contact Simmons & Greene, P.C.

The U.S. Bankruptcy Code, including Chapters 7, 13, and 11, is very complex and many times confusing for any individuals without experience in bankruptcy law. It is important when considering bankruptcy to speak with a qualified and experienced bankruptcy attorney. The attorneys at Simmons & Greene P.C. have made a difference in the lives of their clients and have helped numerous individuals achieve a fresh financial start and begin to work toward their personal financial goals.