Massachusetts State Bankruptcy Laws

What Are The Massachusetts Bankruptcy Exemptions?

MassachusettesMassachusetts law protects all or a portion of your property from being seized by creditors or the bankruptcy trustee in a Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, you are generally allowed to keep all of your assets and property. Certain exceptions may apply, so its wise to consult with a Massachusetts bankruptcy attorney to find which of your assets will be protected in a bankruptcy filed in Massachusetts. In general, the major Massachusetts bankruptcy exemptions include:

GENERAL MASSACHUSETTS EXEMPTIONS
Real Estate (the Homestead Exemption)
Up to $500,000 in equity in land and buildings can be protected.A provision in the new bankruptcy law caps the homestead exemption at $125,000 if you have not lived in the state for at least 40 months prior to the time you file a bankruptcy petition. In some situations, the cap may be permanent. You should consult with a Massachusetts bankruptcy attorney for specific information.
Automobiles
Up to $700 of equity in one motor vehicle can be protected.
Other Property
100 percent of wearing apparel, beds and bedding; $3,000 in household furniture; bibles, and books not exceeding $200 in value; $500 in tools, implements and fixtures and $500 in materials and stock necessary for carrying on trade or business; boats, fishing tackle and nets not exceeding $500; and $125 of cash, savings or other deposits in a banking institution.In Massachusetts, you have the choice of electing the federal exemption statutes rather than the Massachusetts state exemptions. Consult with a Massachusetts bankruptcy attorney for more details.
View the complete list of Massachusetts bankruptcy exemptions

Please remember that this page provides general information only, and is not intended to provide legal advice. The information is not a substitute for the advice of a qualified bankruptcy attorney. If you need legal assistance, consult an attorney.

Which state’s exemption laws apply in your bankruptcy?

MassachusettesGenerally, the laws of the state in which you lived for the 730 days (2 years) prior to filing a bankruptcy petition will apply in your bankruptcy.

If you have not lived in the same state for the 2 years immediately prior to filing your bankruptcy petition, the laws of the state in which you lived for the majority of the 180-day period preceding the 2-year period will likely apply.

If application of the preceding general rules renders you ineligible for exemptions under any states laws, you may be allowed to choose the federal exemptions applicable in your bankruptcy.

Is Massachusetts a Community Property State?

No, Massachusetts is not a community property state. Because it is not a community property state, you will be responsible for your spouses debts only if you voluntarily assumed those debts by, for example, co-signing on a loan given to your spouse. In a non-community property state, one spouse can file for bankruptcy and be eligible to eliminate all of their unsecured debts without the involvement of the other spouse.

How did your senator vote on the new bankruptcy laws?

Following years of intense lobbying by creditors, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). How did your Senators vote on these largely pro-creditor provisions?

Kennedy (D-MA) – NAY
Kerry (D-MA) – NAY

Massachusetts Bankruptcy Court Locations:

United States Bankruptcy Court
1101 Thomas P. O’Neill, Jr. Federal Building
10 Causeway Street
Boston, MA 02222-1074
(617) 565-8950

United States Bankruptcy Court
Donahue Federal Building

595 Main Street, Room 211
Worcester, MA 01608-2076
(508) 770-8900

Barnstable Town Hall
376 Main Street
Hyannis, MA 02601-3917

United States Bankruptcy Court
Federal Building and Courthouse

1550 Main Street
Springfield, MA 01103

Note: You may not have to actually go to one of the above bankruptcy courts. Trustees often conduct your meeting at a local venue.

Although bankruptcy is federal law, the bankruptcy courts in each jurisdiction have local rules that must be followed. A local bankruptcy attorney will be familiar with the specific rules in your area.

Massachusetts Bankruptcy Attorney Locations:

Looking for a Massachusetts bankruptcy attorney? 
Looking for a Boston, Massachusetts bankruptcy attorney?
Looking for a Salem, Massachusetts bankruptcy attorney?
Looking for a Springfield, Massachusetts bankruptcy attorney?

Debts Bankruptcy Won’t Eliminate

Credit cards, medical bills, repossessions, utility bills and most other unsecured debts are dischargeable in a Chapter 7 bankruptcy . Secured debts, like mortgages or auto loans, usually can be discharged only if you are willing to surrender the property that was used as collateral. Otherwise, you can typically keep the property if you are current and continue making timely monthly payments.

However, a handful of debts cannot be eliminated in a Chapter 7 bankruptcy. These include Student Loans, some IRS or State Income Tax Debts, Child Support or Alimony Obligations, Government Fines, and some debts ordered by a divorce decree. Congress drafted the bankruptcy laws and in their own interests made it very difficult to file bankruptcy on any government debt.

What bankruptcy options do you have if you are burdened with these non-dischargeable debts?

Individuals who have non-dischargeable debts are also often facing other financial difficulties and are in a cycle of debt that includes credit cards, loans, and other unsecured debts. One option is to file Chapter 7 bankruptcy to eliminate any unsecured debts and legally stop making any more payments to your unsecured creditors; this will free up some disposable income and allow you to focus on repaying any debts that survived the bankruptcy. Although the non-dischargeable debts will not be eliminated, the broad protection of the automatic stay may give you some protection from government creditors during the bankruptcy, absent a court order lifting the stay from the bankruptcy judge.

A second option is to file a Chapter 13 bankruptcy and include your non-dischargeable debts in the court monitored repayment plan. It is possible to repay only a portion of your non-dischargeable debts back while you are in the bankruptcy, but you’ll still be liable for the percentage that wasn’t paid back after the bankruptcy. The advantage is that the bankruptcy laws prevent even government creditors from garnishing your wages or harassing you while you are actively in a Chapter 13 bankruptcy. With a little breathing room from your creditors and the ability to eliminate a portion of your unsecured debts, you have sufficient opportunity to increase your income or make other arrangements for repaying the non-dischargeable debts after the bankruptcy

Subprime Lending Contributes to Widespread Cleveland Foreclosures

Cleveland has officially joined the growing list of Midwestern cities that have seen a severe increase in foreclosure filings over the last year, and there’s no sign of this dubious trend stopping anytime soon. While subprime mortgage defaults have recently rocked Wall Street and damaged our national economy, the effects of these shady lending practices are being felt by families nationwide, especially so in the Midwest. Michigan and Ohio alone accounted for a combined 15% of the nation’s foreclosures in January, 2007.

Cleveland is in a similar situation to Detroit and other blue-collar working towns in the Midwest experiencing this unfortunate foreclosures spike. Many factors are deemed responsible for the problem – a poor economy, predatory lending tactics, weak consumer protection laws, shady lenders trying to exploit the loosely regulated subprime market for their personal gain, and financially unqualified people obtaining home loans.

The problem however isn’t confined to just the metropolitan areas either, it’s a true statewide problem for Ohio, Michigan and other Midwestern states.

While the SEC (Securities and Exchange Commission) has recently publicly announced that it is investigating a number of companies that operate in the troubled market for subprime mortgage loans, this won’t unfortunately assist or help the families who have fallen or hard times are facing losing their homes in the near future.

Based on household income and an ability to repay, Chapter 13 Bankruptcy is the most effective way to stop foreclosure proceedings. Chapter 13 forces your mortgage company to accept repayment of mortgage arrears over a three to five year period and allows people to stay in their homes. If you or someone you know is involved or will soon be involved in a foreclosure lawsuit, an experienced bankruptcy attorney may be able to help.

Understanding Your Credit

Your credit is very important and lenders evaluate your overall credit risk when determining which loans and interest rates you qualify for. In the information below, you will be able to gain a better understanding of which factors determine your creditworthiness, and explore the many ways that you can improve your credit.

  • Bankruptcy - TN - Understanding Your Credit ScoreYour credit score is a numerical summary of the information on your credit report. Creditors use this number to evaluate the information on your credit report and determine your credit risk. Your credit score typically ranges from 300-850. A credit score of 850 is considered perfect credit, and a score of 300 is considered an indication of someone who is a very large credit risk.
  • Bankruptcy - TN - Order a Credit ReportYou are legally entitled to obtain a free copy of your credit report from each of the 3 major credit reporting bureaus once every 12 months. It is a good idea to order all 3 reports if you are considering filing bankruptcy, but you don’t have to order all 3 reports at the same time, and you can rotate your requests and order one free report every 4 months if you don’t need them all to prepare for a bankruptcy.
  • Bankruptcy - TN - What is a Credit ReportA credit report typically contains a history of every time you have borrowed money and details any time that you may have fallen behind or defaulted on a loan. It also reveals any collection actions, bankruptcies, or judgments to which you have been a party.
  • Bankruptcy - TN - Why is Credit ImportantGenerally, creditors will offer you better loan terms if they consider you to be less likely to default on a loan, and higher rates if they consider you to be more likely to default on a loan. If your credit is very bad, it may be difficult to obtain any sort of credit or loan.
  • Bankruptcy - TN - How to Repair Your CreditRepairing your credit involves reviewing your credit history and correcting any errors or inaccuracies on your credit reports. It is your responsibility to make sure that the information on each of your credit reports is accurate.
  • Bankruptcy - TN - How to Improve Your CreditThere are no magic fixes that instantly improve your credit, and significant credit improvements are usually the result of establishing a good payment history and paying down your debts over a period of years. However, there are several things you can do to give your credit a boost.
  • Bankruptcy - TN - Credit BasicsMost creditors look at your credit history to determine the likelihood that you will make timely payments and pay off a future loan according to the terms of the credit agreement. Generally, creditors will offer you better loan terms if they consider you to be less likely to default on a loan, and higher rates if they consider you to be more likely to default on a loan. If your credit is very bad, it may be difficult to obtain any sort of credit or loan.
  • Bankruptcy - TN - How Will Bankruptcy Affect Your CreditFiling bankruptcy is not the end of your credit, but a new beginning. In fact, bankruptcy eliminates much of your debt and gives you a “fresh-start”. The credit rebuilding process can truly begin following a bankruptcy, and all of your debts discharged in bankruptcy should be reported as having a zero balance.

Common Bankruptcy Questions

Here are 10 of the most commonly asked bankruptcy questions and answers:

1. What is bankruptcy? 
Bankruptcy is a right that US citizens are given to relieve themselves of overwhelming amounts of debt through a legal process. There are 2 main types of personal bankruptcy avaliable: Chapter 7 and Chapter 13.

2. Will bill collectors stop calling me after I file bankruptcy?
Yes! The day that your bankruptcy case is filed with the court is legally the last day that anyone can attempt to collect a debt from you. This is called an “automatic stay” and it protects you from collection attempts until your case is over.

3. Will I have to go to court?
Yes, everyone who goes bankrupt is required to attend a hearing known as the “meeting of creditors”. Although all of your creditors will be notified of the date and time of the hearing it is rare that any will show up.

4. Do I have to list all my creditors when I file bankruptcy?
Yes, since the bankruptcy laws changed in 2005 any and all debt in your name must be listed in your bankruptcy paperwork. This does not necessarily mean that all of your debts and/or property will be erased when your bankruptcy is complete.

5. Will I be able to rent after I file personal bankruptcy?
In most rental situations the landlord will do a credit check and notice that “bankruptcy” is on your credit report. This does not stop them from renting to you, but they may want proof that you are making timely payments elsewhere.

6. How do I know if I should file personal bankruptcy?
You are the only person that can decide if personal bankruptcy is right for you, but if you are facing an overwhelming amount of debt that you cannot see yourself coming out of in the next 1-2 years then personal bankruptcy may be a good option for you. Ask friends or family that have filed bankruptcy how it helped them.

7. Who notifies the creditors that I filed bankruptcy?
Your creditors are notified of your bankruptcy by the bankruptcy court via electronic mail or paper mail via the USPS. You will not be required to communicate with creditors once your case has begun.

8. How do I choose a bankruptcy attorney?
Choosing a bankruptcy attorney may be difficult, but it is well worth the research. Again, you can ask friends or family who have filed, speak with your local bar association, or just call local attorneys and request a free consultation.

9. Can I get rid of student loans or tax debts?
In most cases filing bankruptcy cannot get rid of student loans or tax debts. These debts fall into the category of “non dischargeable” debts that are typically not erased by the bankruptcy court.

10. Can I get credit after filing personal bankruptcy?
Yes! One of the common misconceptions about declaring bankruptcy is that your credit will never recover. The day your bankruptcy is discharged you will be ready to start making positive financial decisions that will quickly begin rebuilding your damaged credit.

South Carolina State Bankruptcy Laws

What Are The South Carolina Bankruptcy Exemptions?

South CarolinaSouth Carolina law protects all or a portion of your property from being seized by creditors or the bankruptcy trustee in a Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, you are generally allowed to keep all of your assets and property. Certain exceptions may apply, so it’s wise to consult with a South Carolina bankruptcy attorney to find which of your assets will be protected in a bankruptcy filed in South Carolina. In general, the major South Carolina bankruptcy exemptions include:

GENERAL SOUTH CAROLINA EXEMPTIONS
Real Estate (the Homestead Exemption)
Up to $5,000 of equity in your homestead can be protected ($10,000 if multiple owners).
Automobiles
Up to $1,200 of equity in one motor vehicle can be protected.
Other Property
$2,500 in household furnishings, goods, clothing, appliances, books, animals, crops, or musical instruments; $500 in jewelry; cash and other liquid assets totaling $1,000; $750 in any implements, professional books, or tools of the trade; all professionally prescribed health aids.In South Carolina, you have the choice of electing the federal exemption statutes rather than the South Carolina state exemptions. Consult with a South Carolina bankruptcy attorney for more details.
View the complete list of South Carolina bankruptcy exemptions

Please remember that this page provides general information only, and is not intended to provide legal advice. The information is not a substitute for the advice of a qualified bankruptcy attorney. If you need legal assistance, consult an attorney.

Which state’s exemption laws apply in your bankruptcy?

South CarolinaGenerally, the laws of the state in which you lived for the 730 days (2 years) prior to filing a bankruptcy petition will apply in your bankruptcy.

If you have not lived in the same state for the 2 years immediately prior to filing your bankruptcy petition, the laws of the state in which you lived for the majority of the 180-day period preceding the 2-year period will likely apply.

If application of the preceding general rules renders you ineligible for exemptions under any state’s laws, you may be allowed to choose the federal exemptions applicable in your bankruptcy.

Is South Carolina a Community Property State?

No, South Carolina is not a community property state. Because it is not a community property state, you will be responsible for your spouse’s debts only if you voluntarily assumed those debts by, for example, co-signing on a loan given to your spouse. In a non-community property state, one spouse can file for bankruptcy and be eligible to eliminate all of their unsecured debts without the involvement of the other spouse.

How did your senator vote on the new bankruptcy laws?

Following years of intense lobbying by creditors, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). How did your Senators vote on these largely pro-creditor provisions?

DeMint (R-SC) — YEA
Graham (R-SC) — YEA

South Carolina Bankruptcy Court Locations:

1100 Laurel Street
Columbia SC 29201-2423

145 King Street
Room 225
Charleston, South Carolina 29401

201 Magnolia Street
Spartanburg, South Carolina 29306

Note: You may not have to actually go to one of the above bankruptcy courts. Trustees often conduct your meeting at a local venue.

Although bankruptcy is federal law, the bankruptcy courts in each jurisdiction have local rules that must be followed. A local bankruptcy attorney will be familiar with the specific rules in your area.

South Carolina Bankruptcy Attorney Locations:

Looking for a South Carolina bankruptcy attorney?
Looking for a Columbia, South Carolina bankruptcy attorney? 
Looking for a Florence, South Carolina bankruptcy attorney? 
Looking for a Greer, South Carolina bankruptcy attorney? 
Looking for a N. Charleston, South Carolina bankruptcy attorney?

What to Expect at Your 341 Meeting of the Creditors

At the filing of either your Chapter 7 or Chapter 13 Bankruptcy , a mandatory proceeding called a “341 Meeting of the Creditors ” is scheduled by the bankruptcy court.  Depending on your jurisdiction and the volume of bankruptcies filed, your 341 Meeting will happen anywhere from 30 to 60 days after the filing of your case.  In populated states like California , New York , Texas and Florida , 341 Meetings occur typically 45 to 60 days after filing since these courts often get backlogged.  In less populated states such as Idaho , Iowa , Wyoming and North Dakota , 341 Meetings usually take place closer to 30 days after the filing of a bankruptcy because there are less total bankruptcies being filed.  You will receive official notice from the Bankruptcy Court of your 341 Meeting’s date, place and time.

341 Meetings are supervised by a government-appointed Bankruptcy Trustee.  Your Trustee’s duties are to handle the administration of your case and represent the creditors at your 341 Meeting in their absence. (NOTE***Your creditors in a Chapter 7 bankruptcy will rarely ever show for your 341 meeting. There are also no judges present at 341 Meetings in either Chapter 7 or Chapter 13 Bankruptcies.) 

The Bankruptcy Trustee’s job at your Chapter 7 341 Meeting is determine whether or not you have the ability to repay your debt based on your income or have any assets that he/she can liquidate to repay your creditors. The Trustee’s job at your Chapter 13 341 Meeting is to make sure that you have filed a feasible plan and are repaying the correct amount to your creditors based on your economic situation at the time of filing.  At either 341 Meeting, you’ll be required to testify under oath regarding your filed bankruptcy petition schedules, finances and income.  Answer all the Trustee’s questions truthfully.  While the Trustee is an adversary in your bankruptcy proceeding, their intention is not to try to verbally trip you up or corner you, they simply want to make sure that your bankruptcy schedules are accurate and that you qualify to file bankruptcy. If you have any additional concerns, make sure your bankruptcy attorneydiscusses all details of your case with you prior to the filing of either Chapter 7 or Chapter 13 bankruptcy so there are no surprises at your Creditor’s Meeting.

341 Meetings are rather informal and you can dress casually, but try to look presentable.  Where you live will dictate what you need to bring to your Meeting of the Creditors, and your attorney will advise you prior to the Meeting.  As a general rule, you’ll need to bring:

1) a valid photo I.D.
2) a social security card
3) your tax returns from the last two years
4) the last two-to-six months of paystubs or proof of income prior to your filing date 

All in all, 341 Meetings move quick and usually only take 5 to 10 minutes to administer.  In Chapter 7 bankruptcies, you will receive your discharge papers roughly 60-90 days after filing.

Illinois Chapter 7 Bankruptcy Options When You Have Excess Equity in Real Estate

A common scenario that we as bankruptcy attorneys often see in personal Chapter 7 bankruptcies is when our clients have equity in their real estate in excess of the Illinois homestead exemption. In Illinois, a Chapter 7 bankruptcy filer is allowed to protect, keep and exempt up to $15,000 of equity in their homestead property, and the exemption doubles to $30,000 for married joint filers.  To qualify for this Illinois “homestead” exemption, you generally must be able to show that you lived in the property in question at the time of the Chapter 7 bankruptcy filing.

Real estate equity is determined by taking the real estate’s fair market value and then subtracting a reasonable cost of sale percentage in addition to any liens that exist on the property.  The Northern, Central and Southern Districts of the Illinois Bankruptcy Courts all generally accept a 7% cost of sale reduction to account for any broker fees, real estate taxes, etc. at the time of sale.   So in an example where an unmarried person owns a homestead property worth $200,000 that has a $120,000 mortgage on it (and no other liens), the formula would look like this: $200,000 – 7% cost of sale = $186,000 – $120,000 mortgage = $66,000 – $15,000 homestead exemption = $51,000 of exposed equity.

Many options exist for bankruptcy clients who have equity in their home in excess of the Illinois homestead exemption:

1) Consider Filing a Chapter 13 Bankruptcy
Typically the most advisable and best option given by bankruptcy attorneys to clients who need the relief of the bankruptcy code but at the same time want to keep their home is to file a Chapter 13 bankruptcy.  In a Chapter 13 bankruptcy, the filer is allowed to repay the equivalent amount of excess equity that’s unprotected by the homestead exemption and therefore keep their home.  Chapter 13 bankruptcies are consolidation repayment plans that are based on a filer’s household disposable income and will range anywhere from 3 years at a minimum to 5 years at a maximum.   To be able to qualify for a Chapter 13 bankruptcy, a filer must demonstrate that they have the sufficient, steady monthly income to support a feasible repayment plan based on their subjective circumstances.

2) Selling the Real Estate Prior to Filing
The Illinois homestead proceeds of sale exemption allows a Chapter 7 filer to keep up to $15,000 in proceeds of sale of a homestead that has been sold within one calendar year prior to the filing of the Chapter 7 bankruptcy.  This exemption also doubles to $30,000 for joint filers.   While it makes most sense for those who are willing to part with their home, this option can be extremely beneficial in that allows qualified Chapter 7 bankruptcy filers to receive a discharge on their unsecured debt, and at the same time retain the cash equity from the sale of their former home in a Chapter 7 bankruptcy filing.  Note: It’s important to remember to not commingle any of the sale proceeds with your general funds in this scenario.

3) Surrendering the Real Estate to the Bankruptcy Court
Another option is to file a Chapter 7 bankruptcy knowing that excess equity in the homestead exists, and allow the Chapter 7 Trustee to sell and liquidate the real estate.  In this scenario, the Chapter 7 Trustee will pay the individual filer their $15,000 proceeds of sale exemption ($30,000 for married filers) out of the equity from the sale.  Any funds gained from the sale of the property in excess of the exemption will be used by the Chapter 7 Trustee to repay the Chapter 7 filer’s creditors.

4) Chapter 7 Trustee Buyout
This option allows a Chapter 7 bankruptcy filer to keep their property, but at a literal cost.  A Chapter 7 filer must produce matching cash funds to cover the equivalent monies that a Chapter 7 Trustee would receive if they sold and liquidated their homestead in a Chapter 7 bankruptcy.   This large cash amount is usually obtained by Chapter 7 filers refinancing the equity out of the property and turning the proceeds over to the Chapter 7 Trustee.  However, this option can be risky and is not usually advisable in that it can often be difficult to qualify for real estate refinancing after the filing of a Chapter 7.

Chapter 13 Bankruptcy Timeline

Chapter 13 bankruptcy is the second most common type of personal bankruptcy filed in the United States today. It is also the more complex of the two. A Chapter 13 bankruptcy is considered more complex because it involves a 3-5 year payment plan in which the debtor is allowed to payback a percentage of their overall unsecured debt. So, for our purposes the timeline will be a minimum of 3-5 years. This may seem like a long time, but it will go by quickly and at the end of the payment plan you will be debt free. Here’s a generic timeline to help you see how your Chapter 13 bankruptcy will go:

  1. Locate and Hire an Attorney – Because of its complexity, it is nearly impossible to file a Chapter 13 bankruptcy without a licensed attorney. The payment plan involves specific calculations and constant communication with the bankruptcy court that the average layman just can’t do. The time it takes you to locate and hire an attorney is dependent entirely on you.
  2. Provide paperwork – Once you have hired an attorney you will be responsible for providing them the financial documentation they need. Most of the required paperwork involves items that you alone will have access to, and this is why the attorney does not obtain them. The paperwork includes pay stubs, bank statements, prior year tax returns, mortgage documents, car loan information, and other financial items.
  3. Draft Petition – The documentation you provide to your Chapter 13 bankruptcy attorney
  4. is for his/her use in preparing the official document required to file a bankruptcy: the petition. The amount of time needed to draft the petition depends on a lot of variables, but you should check with your attorney for an estimate.
  5. Confirmation Hearing – After your case has been filed the bankruptcy court will set up a time to meet with your attorney to discuss the repayment plan he/she has requested for your Chapter 13 case. This is called a confirmation hearing and you are not required to attend if your attorney is present. In many cases it is not necessary for the debtor to be present. The bankruptcy trustee will either approve your plan or send it back to be revised.
  6. Meeting of creditors – If your payment plan is approved then the court will schedule another hearing which you will be required to attend known as the meeting of creditors. This hearing will involve the bankruptcy trustee asking you a series of questions to ensure that no fraud has taken place.
  7. Payment Plan – Your first Chapter 13 payment will be due 30 days after your case was filed and will continue for 3-5 years depending on what the court agreed to. You will make 1 payment every month.
  8. Discharge – At the end of your payment plan you will receive discharge papers in the mail from the bankruptcy court stating that your case was successfully completed. This means that you are debt free and done with your Chapter 13 bankruptcy!

How Filing Personal Bankruptcy Is Different Than Business Bankruptcy

Within every section of the law there are subsections with different rules than the ones before.
The laws that govern bankruptcy are no different; there are separate chapters that can be filed and different rules for each chapter. The laws are sometimes so complex that certain attorneys only specify in one type of bankruptcy. If you are thinking about a hiring a bankruptcy attorney or even filing a do it yourself bankruptcy it is typical that you will be faced with sifting through information about the different types of bankruptcy. Here is some helpful information that highlights some of the differences between the various types of personal and and business bankruptcy:

1. Chapter 7 bankruptcy – This is the most common type of personal bankruptcy filed by either individuals or married couples. Businesses do not have the option to file Chapter 7 bankruptcy. In most cases Chapter 7 bankruptcy forms are used to erase large amounts of unsecured debt such as credit card debt and medical bills. It is typically beneficial for individuals or married couples that have little or no assets that could potentially be liquidated by the bankruptcy court in order to pay off some of their creditors.

2. Chapter 13 bankruptcy
 – This is the second type of personal bankruptcy available to individuals or married couples. Businesses also do not have the option to file Chapter 13 bankruptcy. In most cases filing the necessary Chapter 13 bankruptcy forms allows the debtor to take part in a 3-5 year repayment plan that encompasses a percentage of their overall unsecured debt. The percentage of debt involved in a Chapter 13 repayment plan can range from 10%-100% and is calculated by using the debtors disposable monthly income.

3. Chapter 11 bankruptcy – This type of bankruptcy is for businesses only and works similarly to how a Chapter 13 bankruptcy works for individuals. The bankruptcy court allows businesses to “reorganize” their debt and set up a payment plan that works for the business and its creditors. The repayment plans in both Chapter 11 and Chapter 13 bankruptcies are overseen by a bankruptcy trustee that makes sure payments are made on time and are correctly given to the creditors.

Typically, attorneys utilize the bankruptcy means test to determine the chapter of bankruptcy would best suit your needs. If you own your own business and feel as though a Chapter 11 business bankruptcy would benefit you it may be in your best interest to contact an attorney that specializes in that area. Filing a business bankruptcy does not necessarily mean that your business doors will be shut forever; in fact business bankruptcies aim to get finances back in order so that the business can not only stay open, but continue to grow. Filing a business bankruptcy does not mean that you must file a personal chapter of bankruptcy too, and if you are unsure about why or why not you should.

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