Different Types of Bankruptcy You May Not Know About

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When people think of bankruptcy, they may not realize there are different types of bankruptcy that can be claimed by an individual. There are in fact four different kinds of individual claims that can be made. Each has its own rules and how it works for the person claiming it. These are Chapter 7, 13, 11, and 12.

Chapter 7 is what most people think of when they think about bankruptcy filing. Or at least it’s what people used to think of before the new laws that went into effect October 17, 2005. When an individual files chapter 7, they are not responsible for the debts that were previously owed. With the new law, individuals must past a means test to see if they qualify. To qualify for Chapter 7 now, the claimer must not have more than $100 per month after paying their monthly expenses, including the debts they are trying to eradicate. Part of your property can also be exempt as assets but the balance of your assets will be sold to repay your debtors for part of what you owe. Some debts are not taken away with a Chapter 7, such as school loans. It costs about $274 to file for Chapter 7.There will be knowledge of the different cases to the san diego bankruptcy lawyer for winning them. A commission of the financial loss recovered can be given to the lawyers. 

Chapter 13 is the next most known bankruptcy type. It is similar to Chapter 7 except your debt does not disappear but must be paid back on a payment plan. With the new law from 2005, this is what the majority of people are now filing under. Also the amount of debt allowed to file for this can not go over a certain amount that is set forth in the Bankruptcy Code. The amount of time can take three to five years to totally repay your debt back with this repayment plan. Again, certain debts such as school loans and long term secured debt, like a car loan, will not be part of your payment plan. So even after paying everything off, you can still owe a lot. It costs about $189 to file for Chapter 13.

Chapter 11 is by far the most expensive form of bankruptcy out there. It is usually reserved for businesses but some individuals can also qualify for Chapter 11. Because of the complexity of the law, an individual should seek legal council before attempting to file for Chapter 11. If you do qualify then you will already have your lawyer to proceed with the bankruptcy. Cost for Chapter 11 is about $1039, which is because of the complexity.

The final bankruptcy type that can be filed, Chapter 12 is for only a certain clientele. People that can file are family farmers or fisherman. Obviously there are not many that have these trades. It is similar to Chapter 13, in that the tradesman repays their debt with a payment plan. People in these kinds of careers need special bankruptcy laws because their income is not guaranteed with nature taking a part in how much they make each year. Chapter 12 filing costs about $239.