Different chapters are suitable for differing needs, but bankruptcy, basically, allows relief for debtors by the automatic stay on creditors’ actions after the filing. The automatic stay means that any form of harassment that debtors may have experienced, including letters, phone calls along with other requests for funds, must stop. Consequently, if all the requirements of the court are fulfilled in the honest and open manner in accordance with full disclosure, various types of discharge are obtainable which allows the debtor to take up their lives or businesses once more.

Individuals weighted down by consumer debt, particularly credit card debt, can anticipate having this debt knocked out since most credit card debt is unsecured. Debtors filing under chapter 7 have to make their non-exempt assets available for secured creditors to liquidate. The debtor has to give payment or transfer over the collateral. Unsecured creditors will not receive full payment or, indeed, any payment. The bankruptcy court appoints a trustee who organizes a meeting with creditors and works with the disposal of assets to creditors according to their status. At the completion of the process the debtor in most cases receives a discharge; which means that the debtor is relieved from the cumbersome debt and in a position to start life afresh without more harassment from creditors.

Even though chapter 7 is a solution predicated on relieving debt, in addition there is a provision for reaffirmation of a specific debt assuming the debtor can demonstrate adequate income.

Some other approaches to bankruptcy concentrate on reorganization instead of liquidation. These procedures call for the creation by way of a repayment plan to ensure that the debtor can hold onto property or a business following the reorganization, and under some cases consolidation, of debt. The reorganization approach is chapter 13, and its suitable for individuals who have a regular income sufficient enough to keep their property and manage their mortgages given support and guidance.

Once again the debtor receives relief on filing as a result of the hold on creditor actions, and co-debtors will also be protected from creditors. A repayment plan is produced during debt counseling, but unsecured creditors may receive little or no repayments dependent upon the debtor’s circumstances. After three to five years, the debtor will probably receive a discharge of debts.

Chapter 12 offers family farmers and fishermen a comparable approach to debt management but one which encompasses increased debt burdens that include those related to operating these businesses.

Filing chapter 11 is a bankruptcy option that provides businesses with the chance to remain in control and operate the business, eventually, eliminating the debt burden. This option is appropriate choice for larger businesses as it is a complex, lengthy and potentially expensive business. But it is the option that provides the mechanisms businesses need. It provides for flexibility in changing business environments where repayment plans can be modified.

Whether an individual or a business, under most cases discharge means that the debtor is free from debts in existence prior to filing the petition.
Article References
- San Antonio Bankruptcy
- Bankruptcy Help
- Debt Help