When it comes to bankruptcy filings there are two main types that most people are familiar with and that’s chapter 7 and chapter 13. Even though many people have heard these terms before, they may not be familiar with what each one actually means. An experienced attorney that specializes in chapter 13 and chapter 7 bankruptcy in Utah is the best way to not only understand your options under each type of bankruptcy but determine if filing for bankruptcy is the right solution for your problem.
Chapter 7 Bankruptcy Involves Liquidation
The main difference between chapter 7 and chapter 13 bankruptcies is that chapter 7 involves liquidation. The goal of filing for chapter 7 bankruptcy in Utah is to eliminate most, if not all, of your debts. Both individuals and businesses can file chapter 7, allowing failing businesses that can’t pay their debts to get a fresh start. One downside to chapter 7 is that you aren’t offered any way to repay your current debts, meaning that a creditor can go forward with repossession or foreclosure proceedings.
In order to file for chapter 7, you must have a low income and prove that you don’t have the financial means to repay your debts. If the court approves your filing, you can expect that your debts will be resolved within a few months.
Chapter 13 Involves Repayment
Chapter 13 bankruptcy is only for individuals who need debt relief. Businesses that need help must file chapter 7 bankruptcy in Utah or speak with their attorney about other options. Instead of liquidating your assets to eliminate your debts, your attorney will work with you and your creditors to create a repayment plan. This type of bankruptcy can help you stop litigation or foreclosure on your home. You may even be able to save your home by paying off past due payments.
You will have a deadline to repay your debts, and once you do then the rest of your debts will be discharged. This type of bankruptcy takes a little longer than chapter 7, but it’s a better option if you want to try and pay back some of your debts. This type of bankruptcy is often called reorganization bankruptcy because it allows you to reorganize your debts.
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