The Different Types of Bankruptcy

When your back's against the wall financially, you've got a lot of questions, not least of which is, “what are my bankruptcy options?” There are several different chapters in United States bankruptcy code which offer various advantages and disadvantages, and choosing the right one for you can be difficult and confusing.

If you're considering bankruptcy, contact the Arizona bankruptcy lawyers of the Harmon Law Office, LLC, at 480-829-0494 for the experienced legal advice you need.

Types of Bankruptcy

The United States bankruptcy code is set up to help protect citizens and businesses from being taken advantage of by their creditors. It provides something of a shield to debtors trying to get their way back into the black. You should familiarize yourself with some of the most common chapters of bankruptcy law.

Chapter 7

Chapter 7 is the single most commonly filed type of bankruptcy in the United States, available to both individuals and businesses. It is a form of liquidation bankruptcy, in which non-exempt property is liquidated and sold to pay off your creditors. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) made it somewhat more difficult to file for Chapter 7 in that to do so you must first pass a Means Test. However, about 85% of Chapter 7 filings are actually exempt from this test.

Chapter 13

Chapter 13 is also a very common type of bankruptcy. It provides for debt restructuring, in which the court allows you up to five years to pay off your debts. If you are unable to do so, you usually have to refile for Chapter 7 bankruptcy. In Chapter 13 bankruptcy, you send monthly payments to a court-appointed trustee, who acts as an intermediary between you and your creditors.

Contact Us

If you or someone you love is considering filing for bankruptcy, contact the Arizona bankruptcy lawyers of the Harmon Law Office, LLC, by calling 480-829-0494.