As bills mount and income streams fail to compensate them, consumers can easily come to feel overwhelmed. In most cases, the best policy for those finding themselves in such situations is to seek to inform and work with creditors and others as soon as possible. Knowing of how unlikely they are to recover anything if things are allowed to get worse, most of these companies will strive to make things easier on those who are beginning to have a tough time.
For others, though, the situation can become so intractable that more powerful relief must be sought. Bankruptcy is one such option, and millions of Americans every year successfully complete the process with help from experts like Hitchcock & Associates, P.C and others. A pair of substantially different styles of bankruptcy offer up the main options for those who find themselves in this position.
In the most common form of Bankruptcy, that known as Chapter 7, the assets of the debtor in question are mostly considered up for grabs. Courts and trustees will seek to dissolve these assets for as much in the way of value as they can, using them to pay off creditors partially in accordance with their particular priorities and claims to anything of value.
While that may seem to some to be a harsh way of resolving the problem, it does come with some major benefits. Under this style of bankruptcy, debts are completely forgiven, with the debtor emerging from the process with nothing more in the way of lingering downsides than a substantial black mark on their credit report. For those with little in the way of assets, then, this is generally the preferred kind of bankruptcy.
The other option, known as Chapter 11, is more suited to those who have substantial assets worth preserving. Instead of those being sold off to pay to creditors, the debtor is permitted to keep them. Rather than debts being forgiven, however, court-ordered payments plans are created which are aimed at making creditors at least partially whole. Debtors who fail to abide by these arrangements may find that they are once again subject to collection measures, but are otherwise allowed to retain their assets and function as normally.
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