Bankruptcy laws have been designed to help those who can no longer stay on top of their bills and get a fresh start with their finances. Bankruptcy should be considered when you have very large debts that seem to continue piling up, when you face losing your home or business and when you have reached the end of your means of repayment. Different types of bankruptcies are used under varying circumstances, some are set to liquidate assets to repay debts while another creates a reasonable repayment plan you will be able to manage.

Chapter 7 bankruptcy is the most common form of bankruptcy and applies to individuals and business entities. In a chapter 7 bankruptcy assets are liquidated, given some exempt property and the proceeds are used to settle debts with the named creditors. Chapter 7 bankruptcies will stay on an individuals credit record for 10 years from the date of filing and can prevent you from obtaining new credit while the note exists. The benefits of a chapter 7 bankruptcy must be weighed with a chapter 13 or remaining in debt before choosing which method to use.

Chapter 11 bankruptcy retains the majority of features from a Chapter 7 or Chapter 13 bankruptcy yet is mainly used by business entities. Chapter 11 bankruptcy affords the debtor additional tools to manage and restructure his debt. A key difference in an 11 bankruptcy is that a trustee can be assigned to operate the debtors business. Given power to cancel contracts, obtain new financing and dictate flow of profits. Most businesses will attempt to avoid chapter 11 if possible and it is rarely filed. As such it is listed here merely as reference.

Chapter 13 bankruptcies offer debtors a chance to repay their financial obligations over a 3-5 year period using a court approved and structured payment plan. Many individuals do not qualify for chapter 13 as they lack the disposable income needed to follow such a plan. Some benefits of a chapter 13 include halting foreclosures; obtain discharges on debts not dischargeable under chapter 7 and preventing non-filing co-signers from being dragged into the debt collection process.

Each type of bankruptcy affords varying levels of protection, it is important not to rush into the process without first consulting a qualified bankruptcy specialist. El Centro bankruptcy lawyer John F. Lenderman has been helping those in financial distress for over 20 years. Call today for an absolutely FREE consultation. We can help you decide what may be best for your family, business and financial future.

Please feel free to contact us directly at 760-353-7949 or 760-357-8100 with any question about our areas of practice, or to schedule a consultation.

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