{"id":3227,"date":"2022-01-10T05:30:20","date_gmt":"2022-01-10T10:30:20","guid":{"rendered":"https:\/\/thegraftonfirm.com\/?p=3227"},"modified":"2023-05-16T12:36:44","modified_gmt":"2023-05-16T16:36:44","slug":"the-most-common-types-of-bankruptcies-explained","status":"publish","type":"post","link":"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained","title":{"rendered":"The Most Common Types of Bankruptcies Explained"},"content":{"rendered":"<p><span style=\"font-weight: 400;\"><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-3229 size-full\" title=\"what type of bankruptcy is chapter 7\" src=\"https:\/\/thegraftonfirm.com\/wp-content\/uploads\/2022\/02\/what-type-of-bankruptcy-is-chapter-7.jpg\" alt=\"what type of bankruptcy is chapter 7\" width=\"626\" height=\"447\" srcset=\"https:\/\/thegraftonfirm.com\/wp-content\/uploads\/2022\/02\/what-type-of-bankruptcy-is-chapter-7.jpg 626w, https:\/\/thegraftonfirm.com\/wp-content\/uploads\/2022\/02\/what-type-of-bankruptcy-is-chapter-7-300x214.jpg 300w\" sizes=\"(max-width: 626px) 100vw, 626px\" \/><\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you&#8217;re seeking a fresh financial start, you may be wondering which type of bankruptcy is right for you. The answer depends on your current finances and your expectations for the future.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You should understand how bankruptcies work before deciding whether to file for one. Below is an outline of each type of bankruptcy to help you determine which one applies to you.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Overview_of_Bankruptcy\"><\/span><span style=\"font-weight: 400;\">Overview of Bankruptcy\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-663208413dd17\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-663208413dd17\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\/#Overview_of_Bankruptcy\" title=\"Overview of Bankruptcy\u00a0\">Overview of Bankruptcy\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\/#Consider_the_different_types_of_bankruptcy\" title=\"Consider the different types of bankruptcy.\">Consider the different types of bankruptcy.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\/#Chapter_7_Bankruptcy_Explained\" title=\"Chapter 7 Bankruptcy Explained\">Chapter 7 Bankruptcy Explained<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\/#What_type_of_bankruptcy_is_chapter_7\" title=\"What type of bankruptcy is chapter 7?\">What type of bankruptcy is chapter 7?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\/#Chapter_13_Bankruptcy_Explained\" title=\"Chapter 13 Bankruptcy Explained\">Chapter 13 Bankruptcy Explained<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\/#Chapter_11_Bankruptcy_Explained\" title=\"Chapter 11 Bankruptcy Explained\">Chapter 11 Bankruptcy Explained<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\/#Understand_the_benefits_of_each_chapter\" title=\"Understand the benefits of each chapter\">Understand the benefits of each chapter<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\/#Bankruptcy_Chapter_7\" title=\"Bankruptcy Chapter 7\">Bankruptcy Chapter 7<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\/#Bankruptcy_Chapter_13\" title=\"Bankruptcy Chapter 13\">Bankruptcy Chapter 13<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\/#Bankruptcy_Chapter_11\" title=\"Bankruptcy Chapter 11\">Bankruptcy Chapter 11<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/thegraftonfirm.com\/bankruptcy\/the-most-common-types-of-bankruptcies-explained\/#Make_the_correct_choice_Talk_to_a_Towson_Maryland_Bankruptcy_Attorney\" title=\"Make the correct choice: Talk to a Towson Maryland Bankruptcy Attorney.\u00a0\">Make the correct choice: Talk to a Towson Maryland Bankruptcy Attorney.\u00a0<\/a><\/li><\/ul><\/nav><\/div>\n\n<p><span style=\"font-weight: 400;\">Bankruptcy is a legal procedure used to get debt relief. The bankruptcy rules of the United States provide for various sorts of bankruptcy, depending on the type of filer. The most frequently used distinction is between individuals and corporations, or personal and corporate bankruptcy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Each chapter of the Bankruptcy Code is associated with a certain sort of bankruptcy. The United States Bankruptcy Code is the federal legislation that governs bankruptcy proceedings. Since it is federal, it is uniform throughout the United States, and the bankruptcy court is a federal court. A <\/span><a href=\"https:\/\/thegraftonfirm.com\/\"><span style=\"font-weight: 400;\">Towson Maryland bankruptcy law firm<\/span><\/a><span style=\"font-weight: 400;\"> can help you with more information.\u00a0\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Consider_the_different_types_of_bankruptcy\"><\/span><span style=\"font-weight: 400;\">Consider the different types of bankruptcy.<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Under the United States Bankruptcy Code, there are six distinct categories of bankruptcy. Each of them is called after the a chapter. Thus, we have:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Chapter 7 (liquidation),<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Chapter 9 (adjustment of municipal debts),<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Chapter 11 (reorganization)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Chapter 12 (adjustment of debts of a family farmer or fisherman with a regular annual income)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Chapter 13 (adjustment of debts of an individual with a regular income), and\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Chapter 15 (ancillary and other cross-border cases).\u00a0<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">These chapters apply to a variety of situations and entities. The most often used bankruptcy chapters are Chapter 7 and Chapter 13 for individuals and Chapter 7 or Chapter 11 for businesses.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, in this post, we&#8217;re going to highlight only the most common types of bankruptcy.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Chapter_7_Bankruptcy_Explained\"><\/span><span style=\"font-weight: 400;\">Chapter 7 Bankruptcy Explained<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"What_type_of_bankruptcy_is_chapter_7\"><\/span><span style=\"font-weight: 400;\">What type of bankruptcy is chapter 7?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><a href=\"https:\/\/thegraftonfirm.com\/debt-resolution-services\/chapter-7\"><span style=\"font-weight: 400;\">Chapter 7<\/span><\/a><span style=\"font-weight: 400;\"> is often referred to as a &#8220;liquidation bankruptcy&#8221; because the law demands that some property be liquidated to satisfy unsecured creditors in return for a fresh start. The sale (liquidation) is overseen by a bankruptcy trustee.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The trustee may sell only property that is not exempt from taxation (called <a href=\"\/bankruptcy\/what-is-non-exempt-property-in-bankruptcy\">non-exempt property)<\/a>. If all of your properties are exempt, the trustee cannot sell them. In this instance, your creditors receive nothing, and you retain all of your property.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In most personal Chapter 7 bankruptcy cases, all assets are protected by state law. If no non-exempt property is involved, most personal Chapter 7 bankruptcy cases are completed within four to six months.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The <a class=\"linkilo_keyword_link  hyperlinks\" href=\"\/bankruptcy\/what-debts-are-not-included-in-the-bankruptcy-discharge\"  rel=\"dofollow\" title=\"bankruptcy discharge\" data-linkilo-keyword-link=\"linked\">bankruptcy discharge<\/a> &#8211; the court judgment that cancels your dischargeable debt &#8211; is typically issued about three to four months after filing. As soon as that occurs, you may begin repairing your credit.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Chapter_13_Bankruptcy_Explained\"><\/span><span style=\"font-weight: 400;\">Chapter 13 Bankruptcy Explained<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">This is the second most prevalent kind of personal bankruptcy. Unlike Chapter 7, companies (other than sole proprietorships) are not permitted to petition for bankruptcy under<\/span><a href=\"https:\/\/thegraftonfirm.com\/debt-resolution-services\/chapter-13\"><span style=\"font-weight: 400;\"> Chapter 13.\u00a0<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">The term &#8220;reorganization&#8221; refers to a repayment plan that often pays just a part of the filer&#8217;s entire debt. To petition Chapter 13, you must have a specified amount of secured and unsecured debt (including personal loans).<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Chapter_11_Bankruptcy_Explained\"><\/span><span style=\"font-weight: 400;\">Chapter 11 Bankruptcy Explained<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Bankruptcy under Chapter 11 is frequently used to <\/span><a href=\"https:\/\/thegraftonfirm.com\/debt-resolution-services\/chapter-11\"><span style=\"font-weight: 400;\">reorganize a business<\/span><\/a><span style=\"font-weight: 400;\"> or organization. Businesses design a strategy for maintaining operations while repaying their debt, which the court and the creditors must approve.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Certain individuals, such as real estate investors, who have an excessive amount of debt and a large number of high-value properties and assets, may also decide to file under Chapter 11.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Except if you&#8217;re a professional athlete or a celebrity, though, you are unlikely to mess with this one.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Understand_the_benefits_of_each_chapter\"><\/span><span style=\"font-weight: 400;\">Understand the benefits of each chapter<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Bankruptcy_Chapter_7\"><\/span><span style=\"font-weight: 400;\">Bankruptcy Chapter 7<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Debt forgiveness &#8211; Chapter 7 bankruptcy allows you to repay creditors fast or eliminate a large portion of your debt.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Creditor harassment is stopped \u2014 When you file for bankruptcy, the judge will impose an automatic stay on creditors, compelling them to refrain from contacting you or repossessing your property.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Exemptions for residential and personal property \u2013 Chapter 7 bankruptcy does not require you to liquidate all of your assets. The legislation has exclusions that allow you to keep the most important items to you.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Recover credit score &#8211; While Chapter 7 bankruptcy does have a negative impact on your credit score, you may gradually rebuild it over time.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Assistance with your house \u2014 If you&#8217;re falling behind on your home mortgage payments, you can reclaim part of your living space by filing for Chapter 7 bankruptcy.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Chapter 7 bankruptcy may be an efficient strategy to resolve an automobile loan.<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Bankruptcy_Chapter_13\"><\/span><span style=\"font-weight: 400;\">Bankruptcy Chapter 13<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">A Bankruptcy chapter 13 is a 3-5 year payment plan. The duration of the repayment plan may discourage some people, making Chapter 7 bankruptcy appear more appealing. However, a Chapter 13 bankruptcy may be the best option for your financial health in the long run.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Among the benefits of Chapter 13 bankruptcy are:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Allowing you to pay only what you can afford<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Discharge debts that you are unable to pay in full<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Saving your home from going into foreclosure\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Avoiding the need for a second or bigger mortgage<\/span><\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Bankruptcy_Chapter_11\"><\/span><span style=\"font-weight: 400;\">Bankruptcy Chapter 11<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Among the benefits of Chapter 11:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">An extension of payment periods on real estate mortgages or equipment loans is possible under the concept.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Unless the court adopts a plan without creditor consensus in Chapter 11, the debt discharge occurs at plan confirmation (approval) rather than plan completion.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Debtors do not have to provide a trustee with their disposable income. The &#8220;debtor in possession&#8221; controls the company.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Trustees appointed to supervise cases under Chapter 11 are frequently appointed due to severe negligence or fraud.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Make_the_correct_choice_Talk_to_a_Towson_Maryland_Bankruptcy_Attorney\"><\/span><b>Make the correct choice:<\/b><span style=\"font-weight: 400;\"> Talk to a Towson Maryland Bankruptcy Attorney.\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Bankruptcy is not a move that should be taken lightly. It will have a significant negative influence on your finances, credit score, and future. Before <a class=\"linkilo_keyword_link  hyperlinks\" href=\"\/ch7\/declaring-bankruptcy-under-chapter-7-and-the-means-test\"  rel=\"dofollow\" title=\"declaring bankruptcy\" data-linkilo-keyword-link=\"linked\">declaring bankruptcy<\/a>, you should carefully consider all of your choices and consider the long term effects bankruptcy may have on your life.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you are facing bankruptcy, you should <\/span><a href=\"https:\/\/thegraftonfirm.com\/contact-us\"><span style=\"font-weight: 400;\">consult with a competent Maryland Bankruptcy Attorney<\/span><\/a><span style=\"font-weight: 400;\">. Call us today at (410) 505-0414.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you&#8217;re seeking a fresh financial start, you may be wondering which type of bankruptcy is right for you. The answer depends on your current finances and your expectations for the future.\u00a0 You should understand how bankruptcies work before deciding whether to file for one. Below is an outline of each type of bankruptcy to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3229,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57],"tags":[],"_links":{"self":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/3227"}],"collection":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/comments?post=3227"}],"version-history":[{"count":5,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/3227\/revisions"}],"predecessor-version":[{"id":3593,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/posts\/3227\/revisions\/3593"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/media\/3229"}],"wp:attachment":[{"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/media?parent=3227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/categories?post=3227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thegraftonfirm.com\/wp-json\/wp\/v2\/tags?post=3227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}