Individuals, as well as business owners, are able to file bankruptcy. When it comes to common types of bankruptcy, the differences are primarily the type of bankruptcy an entity is allowed to file and what needs to happen after the bankruptcy is discharged. For individuals, Chapter 7 and Chapter 13 are the most common types of bankruptcy. For businesses, Chapter 7 and Chapter 11 are the most common types.
The differences are described in detail below so that you can best assess what may be your best option. However, it is always better to consult with our bankruptcy lawyers to find out which is best for your situation.
Chapter 7 and Liquidation
Chapter 7 is a liquidation bankruptcy. Those who file using this method realize they may need to part with some of their assets. Unsecured debts can be discharged, but secured debt will rely on the security provided to account for the debts. This is true of businesses as well as of individuals. The main difference here is that an individual can go on after filing, but the business will have to close its doors.
However, Chapter 7 is one of the most common types used by both individuals and businesses when the debt simply becomes too overwhelming for the person or business to handle. Click here for more about Chapter 7 (http://www.zerodownbankruptcy.com/Chapter-7/).
Chapter 13 and Reorganizing
Chapter 13 reorganizes debt so that the debtor stops accumulating outlandish interest rates and has a limited amount of time in which to pay off as much of the debt as possible. If the debts are not paid in full as assigned by the courts, they may be discharged at the end of the term. This type of bankruptcy cannot be used by partnerships, limited liability corporations, or corporations.
Chapter 13 bankruptcy is most commonly used by those who wish to retain all of their possessions and are capable of making limited payments in a timely manner. You can read more about Chapter 13 bankruptcy here (http://www.zerodownbankruptcy.com/bankruptcy-lawyer-tampa-florida/Chapter-13/).
Chapter 11 and Businesses
Chapter 11 is commonly used by partnerships, limited liability corporations, and corporations. It is essentially the business version of Chapter 13. The debts of the business are reorganized just as they are in Chapter 13 for individuals, but this method takes into account the details that are unique to businesses. Unlike Chapter 7, Chapter 11 allows businesses to continue operating even after the bankruptcy is discharged.
This can be especially important when there is a brand name involved that has already developed a reputation. Rather than filing Chapter 7 and starting the entire branding process over, the company is sometimes better off filing Chapter 11 and continuing to operate after restructuring their finances to be more productive.
There are other types of bankruptcy as well, but these three are by far the most common. Of the three, Chapter 11 is the one that is used the least. Those who plan to file any of these types of bankruptcy should seek the assistance of our bankruptcy lawyers to ensure they are choosing the right one.
Please share this post online with anyone who may be considering Chapter 7, Chapter 11, or Chapter 13 bankruptcy.
Florida Bankruptcy Attorneys
Tampa Florida Chapter 13 Lawyers
Florida Chapter 7 Bankruptcy Lawyer