There are quite a few bankruptcy options available. You could choose one that suits your need. The important thing is to have a thorough understanding of each option so you can pick one that will work best for you.
Chapter 7 bankruptcy option:
Chapter 7 bankruptcy option is usually the last one pursued by consumers. It wipes clean all the debt but also takes away all the assets with the secured debt. However the good thing is that when you have filed for Chapter 7 bankruptcy, the creditors will have to stay away and they cannot ask for any payments. The bill collectors are unable to take any sort of action against the consumer. Yet some of your possessions may have to be sold off to clear off the existing debt.
Chapter 7 bankruptcy option is not available in every state. Also, not every person is allowed to file for this option. First you have to undergo a means test. It is an income based test. It will determine whether your income is feasible enough to file for any other bankruptcy options. Still if your income does not cover the payments over a period of five years, then you can go ahead and file for Chapter 7 bankruptcy.
Chapter 9 bankruptcy option:
The Chapter 9 bankruptcy option is rarely used by the average consumers. It is used in the cases where huge debts have been run up but there are no necessary assets to sell and pay off the debt. Municipalities make use of this bankruptcy option. Some common users of this option are businesses based on agriculture and professional fishing companies. When this bankruptcy option is selected, the court works with the business owner to formulate a plan of repaying the debt over time.
Chapter 11 bankruptcy option:
The Chapter 11 bankruptcy option is utilized by companies. It is an option for companies that are looking to reorganize their debts. Using this option, they can keep on paying some debts and get some others discharged. The financial situation of the company is analyzed when the bankruptcy is filed. The company can keep on paying some of the creditors.
Chapter 12 bankruptcy option:
The Chapter 12 bankruptcy option works quite similarly to the Chapter 9 option. The company can work with the court to repay the debt over a five year period. In the meantime, all the assets of the company remain with them. A trustee is used to make sure that the company makes the payments on time and clears the debt.
Chapter 13 bankruptcy option:
The Chapter 13 bankruptcy option is for the average consumers what the Chapter 12 option is for companies. A consumer can file for this option if he or she can pay off the debt over a period of five years. The consumer gets to keep the assets as the debts are eventually paid off. A trustee is assigned to make sure that the payments are made on time and the complete debt is cleared.
