What is Bankruptcy Court?

When Filing For Bankruptcy An Individual Or Business Should Always Consultant A Professional Bankruptcy Attorney

Bankruptcy is the process of eliminating either a consumer or business debt, which is protected under the federal bankruptcy court. Essentially, there are two types of bankruptcy and they come in the form of chapter 7 and chapter 13. Each has unique characteristics and can serve specific purposes based on each individual situation. Recognizing the differences is important to understanding exactly what bankruptcy is.

Chapter 7 may be filed by both individuals and businesses and typically lasts around six months. It is also called the liquidation bankruptcy because it allows the banks to collect their money by selling the individuals or company's assets until the debt is recouped. They may also take specific items such as vehicles and property if the debt falls under a secured type of debt.

Chapter 13 represents a type bankruptcy requiring repayment. This happens when the debtor can provide a solid source of income, which will allow them to begin a payment plan over the next five years. The payments will depend on the amount of debt that has been accumulated, the amount of monthly income produced, and the type of money that may have been recouped if a Chapter 7 would have been filed.

In the end, no matter what type of bankruptcy an individual or business files, certain debts cannot be eliminated. These typically include spousal debts such as child support and some delinquent tax debts. As always, when determining what type of bankruptcy an individual or business qualifies for it is always important to consultant a professional bankruptcy attorney.