What are the different kinds of bankruptcy for individuals or for small businesses and what are the differences?
The two basic kinds are Chapter 7 or Chapter 13. Chapter 7 is available to both individuals and to businesses. This is a total liquidation, under the supervision of a Bankruptcy Trustee, of all of your assets that are not protected by certain “exemptions”, such as a certain amount of equity in your home or your car. Any money received by the trustee is paid out, pro rata to the various creditors and the Debtor is then freed from his or her debts. Chapter 13 is available only to individuals whose debts do not exceed a certain amount. It allows for a plan to pay creditors at least part of their debt over a three to five year period. The amount paid depends on your current income and the value of your assets. The trustee would collect your payments, generally on a monthly basis, and pay the money out to creditors over the contemplated period. Assuming the successful completion of the plan, a discharge would then be received and the unpaid balance would need not be paid.
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