The United States Bankruptcy Code is complicated. There are tons of rules, exceptions, and methods to file for protection. There are rarely-used types of bankruptcies that are only open to certain types of businesses. But for most people, there are three major types of bankruptcies:
- Chapter 7 Bankruptcy
- Chapter 11 Bankruptcy
- Chapter 13 bankruptcy
If you are facing financial hardship, bankruptcy might be the answer for you. But not every type of bankruptcy is the same. That's why it helps to have an understanding of what these three types of bankruptcy filings mean and how they can affect you. The best way to have your questions answered, however, is to discuss them with an experienced Nevada bankruptcy attorney. You can contact Vohwinkel Law at any time to discuss how a bankruptcy filing can affect you.
What is a Chapter 7 Bankruptcy?
A Chapter 7 bankruptcy is also known as the “fresh start” bankruptcy. It is the shortest type of bankruptcy, and the end result typically involves discharging most of your debt without paying much of anything to your creditors. While the bankruptcy trustee in your case may have the ability to sell some of your property to pay what he can to your creditors, the reality is that thanks to bankruptcy exemptions under Nevada law, most of your property will be protected.
Chapter 7 bankruptcies are ideal for debtors with large amounts of unsecured debt and little in the way of assets. While there might not seem to be a lot of downsides to this type of bankruptcy, the reality is that many people simply won't qualify for Chapter 7 protection. To be eligible, you must satisfy a means test showing your household income is below the state median. If you make too much to qualify for Chapter 7, your only option may be Chapter 13.
What is a Chapter 11 Bankruptcy?
For most people, Chapter 11 bankruptcies will be the least relevant option. While in certain circumstances Chapter 11 filing is available to individuals, it is primarily used as a vehicle for businesses to restructure under the protection of the bankruptcy courts. While a Chapter 11 bankruptcy is ongoing, the business continues to operate and works with creditors in order to pay what is owed. It also allows a company to maintain ownership over their assets as they try and work out their debt issues.
What is a Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy is available for both individuals as well as business that have secured assets they want to hang on to over the course of the bankruptcy. Unlike a liquidation, a Chapter 13 bankruptcy is a long process that involves a three or five-year plan to pay back your creditors so that you are caught up on all of your debts when you exit bankruptcy. For a Chapter 13 plan to succeed, you will need a steady income stream you can rely on.
During the course of your Chapter 13 bankruptcy, you will offer a plan to the court which they can accept or deny. The plan sets out how you will pay each creditor back during the three or five-year process. You will also identify any secured debts you don't want to attempt to maintain. Chapter 13 is a great option for preventing foreclosure, stopping repossession, and ending annoying collection calls.
How an Experienced Nevada Bankruptcy Attorney can Help
The bankruptcy process can be very complicated, but when utilized correctly it can be very rewarding as well. For many, it is their only opportunity to get a financial fresh start or stop the foreclosure process. To get the most out of a bankruptcy filing, it is important to have the guidance of an experienced Las Vegas bankruptcy attorney. The professionals at Vohwinkel Law have years of experience helping Nevada residents get back on firm financial foot with a successful bankruptcy filing. To learn more, contact Vohwinkel Law for a free consultation.