Guides
- Is Drunk Driving a Felony, What’s the Punishment, and How Many People Die From It?
- What is Domestic Abuse vs. Domestic Violence, and What Are the Differences?
- What is a Roommate Agreement, What Are the Benefits, and What Should You Include?
- What is Public Indecency, and What Are the Laws, Charges, and Penalties?
- What Are the Pocket Knives Laws, Legal Lengths, and Rules for Illegal Types?
- What is Aiding and Abetting and What Are the Punishments and Charges for It?
- Where Can You Be Naked in Public and Celebrate National Nude Day?
- What Is Child Custody and How to File for It Without an Attorney
- What to Do if Someone Has Stolen Your Driver's License Number and How to Replace It
- What is Bail Jumping: Punishments and Jail Time for Failure to Appear in Court
- Dating a Minor: Is It Legal and What Is the Age of Consent?
- How to Conduct a Dating Profile Search and Find Someone on a Dating Site
- What is Personally Identifiable Information and Why is PII Protection Important?
- What Is a No-Fault Divorce, When Did It Start and Why It Can Be Bad
- The Differences Between Moving And Non-Moving Violations
- What are Aggravating and Mitigating Factors in a Criminal Case?
- What Is ADR: Process, Meaning And Examples
- Definition and Differences Between Conspiracy Theories and Conspiracy Charge
- How to Get a Divorce: Process, Stages and Required Papers
- Embezzlement as a White-Collar Crime: Definition, Meaning, and Examples
- What Is a Car Registration, How Much Does It Cost and How to Get One?
- Types of Email Archiving and How to Retrieve Them
- How to Protect Your Car From Theft or Report It Stolen
- How to Organize and Protect Your Personal Documents?
- How to Find and Reconnect With Old Friends: Proven Techniques That Work
- Business Records: Types, Examples and How to Search
- Right to Privacy: Is It Protected By The Constitution?
- Ownership and Tenancy in Severalty in Real Estate
- What Different Types of Marriages Are There?
- Should You Believe in Age Gap Rules Calculation
- What Is Driver’s License Status and How To Check It
- What Is Civil Marriage: Pros and Cons
- Top 5 Most Famous Serial Killers Of All Times
- What Was The Subprime Mortgage Crisis
- Most Famous Murder Cases Throughout History
- The Dynamics and Consequences of Ghosting Someone in Personal Relationships
- What is Incarceration? Definition, Process, and Impact
- What is A Mortgage-Backed Security (MBS)
- Is AI Dangerous? Unveiling the Risks of Artificial Intelligence
- What is a VPN?
- 7 Cybersecurity Threats to Look Out For
- What Are Debtors and Creditors, and What Are Their Legal Rights and Differences?
- What Are the Types of Business Ownership and How Can You Transfer It?
- What is a Tax Lien, How Does It Work & How to Stop One?
- What is the Difference Between Civil and Criminal Cases?
- Property Ownership Types You Should Know About
- Community Safety Initiatives: How to Make Your Neighborhood Safer
- What is a Lien and How Lien Priority Works?
- Campus Safety 101: Essential Tips for a Secure College Life
- How to Know If Someone Is Divorced?
- What are the CCPA and CPRA?
- How to Get Over a Breakup?
- U.S. Violent Crime Definition & Statistics
- The 5 Steps You Should Know When Adopting a Child
- What Is Criminal Profiling and Is It Really Effective?
- A Full Guide on Reasonable Suspicion vs Probable Cause
- What Is Email Encryption & How to Encrypt an Email?
- What is a White Collar Crime? A Full Guide
- Rental Scams: How Do They Work & How to Catch Scammers?
- A Complete Guide on Parole vs Probation
- How to Submit a Data Removal Request and Hide Results About You on Google Search
- A Full Guide on House Arrests
- A Complete Guide on Marriage and Civil Union
- How to Safeguard Yourself and Deal with Marriage Debt
- What is Eyewitness Testimony?
- A Full Guide on Gentrification: Why is it a Problem?
- 8 Most Dangerous Twitter Scams and How to Avoid Them
- Pretexting Attacks: Common Types and How to Deal with Them
- How Do Zelle Scams Work and Things to Look Out For
- What Is Business Email Compromise, How to Defend Against It?
- What Is a Wellness Check, What Does It Consist of and How to Call For It?
- What Is a Temporary Restraining Order and How Do You Get One?
- What is Smishing And How to Prevent it?
- Spam Emails: Types and Ways to Block Them
- Email Masking & Masked Email Addresses
- Spot a Fake QR Code & Avoid Getting Scammed
- Common NFT Scams to Look Out For & Ways to Avoid the Fake Ones
- What to Do If You Witness a Crime?
- What Is Skip Tracing and How Does It Work?
- How to Avoid Common Venmo Scams and Protect Yourself From Scammers
- Can You Get Child Custody If You Have a Criminal Record?
- Common Amazon Scams and Ways on How to Avoid Them
- How to Find Liens on a Property?
- Multiple Bankruptcies: How Often You Can File One?
- How to Adopt a Child in the US?
- I Lost My Birth Certificate. What Should I Do?
- Warning Signs of Job Scams and How to Protect Yourself
- What Is a Ban the Box Law?
- What is Expungement?
- How to Transfer Property After Death Without Will
- What Is a Police Blotter?
- How to Appeal a Parking Ticket
- What Is a Clean Driving Record, How It Affects Insurance and How to Keep It Clean
- What is Title Washing?
- What is Extortion?
- How To Run a Motorcycle Title Search
- What Is a Digital Footprint?
- What is Anti Money Laundering (AML)?
- Guide on How to Get a Death Certificate
- What is the US Equal Employment Opportunity Commission (EEOC)?
- What is Multi Factor Authentication?
- What is a Citizen's Arrest?
- How to Know that You’re in an Obsessive Relationship
- Guide to Online Survey Scams
- 13 Different Types of Police Officers
- Full Guide on Work-from-Home Scams
- Is Private Browsing Really Private?
- Different Types of Felony Classes & Charges
- What is Juice Jacking?
- What are Romance Scams?
- Traffic Offenses and Violations
- What is Doxing and How to Prevent it?
- What are Spam Text Messages
- The U.S. Death Penalty: History and Modern Usage
- What Are the Different Types of Bankruptcies and Which One Is Right for You?
- Common eBay Scams to be Aware of
- What Happens When You are Booked in Jail?
- What Information Can You Get From A License Plate
- Different Types of Assets
- How to Search and Find Family Members and Relatives Who Are Long Lost?
- Car History Guide, Benefits, Importance
- Am I Dating a Stalker?
- How to Find out if Your Partner is Cheating
- What Are the Types and Tools of Packet Sniffing Attacks?
- Intellectual Property Law and Rights
- Cyberstalking And Its Dangers
- A Guide to Phishing Scams
- What is Organized Crime?
- I’ve Lost My Driver’s License: What Should I Do?
- Misdemeanor Charges: Types, Classes, and Penalties
- A Complete Guide On Catfishing
- Vanity Phone Numbers: Why They Are Important and How to Get One
- What Happens When You Get Arrested
- Guide to Find Information About a Person Online
- How To Find And Claim Unclaimed Money
- What Happens if You Violate Probation
- Guide on How to Remove a Mugshot from the Internet
- How to Stay Safe on Public WiFi
- What Is an Outstanding Warrant and How Can You Check if You Have One?
- Different Types of Car Insurance
- What Is Cyptojacking?
- What Is Email Security?
- What Is the Deep Web and What Can Be Found There?
- What Happens When You Declare Bankruptcy
- How Divorce Settlements are Calculated
- What are Common Methods of Social Engineering
- What is the Difference Between a General Lien and a Specific Lien?
- How to Detect Odometer Rollback
- Different Types of Probation
- Finding forgotten life insurance policies
- What is Bearer Bond and Why the US Banned it
- Everything you need to know about small claims court
- Moral Turpitude: Definition, Examples, and Much More!
- Misdemeanor vs Felony
- How to Read a VIN Number and What It Tells You
- How to Find Out Who Hacked Your Cell Phone
- How Long Does a Misdemeanor Stay On Your Criminal Record?
- The Paypal Phishing Scam You Should Care to Avoid
- How Many Different Types of State License Plates Are There and Which Is the Standard One?
- Effects of Cyberbullying: Complete Guide for Parents
- What is the DPPA?
- Is Petty Theft a Misdemeanor and What Are the Consequences?
- What is a Life Sentence? Life in Prison
- Find out How to Check if Someone Has a Warrant Online for Free
- Is a Marriage Certificate the Same as a Marriage License and What Are the Differences?
- The Ten Most Popular Celebrity Mugshots
- How to Find Out if Someone is Married?
- How to Stop Phone Number Spoofing?
- How To Avoid Probate
- Dealing with abandoned vehicles in your neighborhood
- How to Find Someone's Cell Phone Number by Their Name
- Who Are the Worst Drivers in America?
- How To Find Unclaimed Money From Deceased Relatives
- What is a Digital License Plate?
- How to Find out if Someone Died?
- Murder vs Manslaughter: The Differences and Definitions
- How to Hire a Private Investigator?
- What Is a Number Neighbor?
- How to Find Out if Someone was Arrested
- How to Find Someone's Birthday?
- What is a Car Title
- How to Obtain a Police Report and Court Records?
- What is the Punishment for Filing a False Police Report?
- Prison Valley: Look inside Prison Town
- How to Get Custody of a Child Without Going to Court?
- How to Find Someone’s Social Media Profiles?
- What to Do if Your Phone Is Tapped?
- What Is a Deed in Real Estate?
- Where Was The First US Federal Penitentiary Established?
- Can You Track Someone's Location with Just a Phone Number?
- What Is a Restricted Phone Call and How to Block The Number?
- Who is the Most Dangerous Prisoner in the World?
- Poshmark Scams: How to Prevent and Report Them
- What to Do When Someone Is Missing: Practical Steps on How to Find a Missing Person
- How to Send Money to an Inmate in a Prison or Jail
- DUI vs DWI: The Difference Between DUI and DWI
- How Long After Buying a Car Do You Need to Register it?
- How to Find Someone's Address?
- What is an Ignition Interlock Device?
- What Is Situational Crime Prevention?
- How Can I Find Out Who Called Me for Free?
- Gun Free Zone Statistics and Facts
- Online Threats and Digital Security: Trends, Types and Most Common Examples
- Cold Cases: Best Practices For Police Officers and Investigators
- Court Order: Definition, Types and Examples
- What Does a Fingerprint Background Report Show?
- How to Check Your Criminal Record?
- What is Tort Law?
- How to Calculate Child Support
- Property Rights: Definition, and Characteristics
- 12 Common Reasons for Public Records Request
- What is Antitrust Law?
- Virginia Gun Confiscation Law
- Ways to Know Who Owns a House
- Neighborhood Watch Program
- How to Perform a Mugshot Search?
- Crime Mapping
- Safest Colleges in Florida
- Veterans Guide to Cars and Driving
- U.S. Correctional System: Structure, Incarceration and Facts
- License Plate Laws in the US
- How to Find Out If Someone Is in Jail?
- Email Hacking: Laws, Penalties and Protection
- Romeo and Juliet Laws
- Holiday Safety for Home and Family
- Differences between Criminal and Arrest Records
- Public Records and Property History: What is Public Information and What Isn’t
- How to Look up Immigration Inmates?
- Famous Prisons in the USA
- How to Find Out Who Owns a Vehicle Using Reverse Lookup Tools
- How to Search for Your Family Tree?
- The Federal Judicial Center
- Mass Incarceration in the USA
- What is COPPA (Children's Online Privacy Protection Act)?
- Data Safety After The Capital One Breach
- Scholarships Guide for Students
- Complete Guide to Student Safety
- What Is a Vehicle Identification Number?
- Determining Divorce: 5 Types of Divorce You Must Know
- Sex Offenders: Complete Guide to be Protected
- New Privacy Laws and Public Records
- Motor Vehicle Registration in the US
- Digital Token Age: Security Laws and Regulations
- Facial Recognition Technology and Legal Restrictions
- What Shows up in a Background Report
- What is Repossession of a Car?
- Protecting Yourself from Phone Scams
- Human Rights in the Prison
- What are Business Competition Laws?
- What is a Hate Crime?
- Starting a Business and Business Licenses
- General Data Protection Regulation (GDPR) Guidance
- Criminal Justice Reform
- Tax Reform Impact and Changes To Know
- Self-Driving Cars: Laws and Regulations
- White-Collar Crime: Statistics and Facts
- Have You Been Arrested? Cases You'll Need a Lawyer
- How to Get a Driver's License in the US
- Car Theft in the US: Statistics and Facts
- Identity Theft Passport Program
- Changing your Name after Marriage: What You Need to Know
- Finding the Perfect Roommate: Dos and Donts
- What to Do in a Car Accident?
- Property Crimes: How to Burglar Proof Your Home
- Consumer Laws in the US: What Do They Mean for a Customer and a Business Owner
- Child Trafficking: The Scope, Understanding, and Prevention
- Business Assets: A Guide to the Financial Health of your Business
- Guide To The College Application: How, When and Where to Apply
- Which States Have “Stand Your Ground” Laws?
- Adolescent Depression Symptoms and Causes
- Things to Know About the U.S. State Department Travel Advisory System
- Inheritance in the US: With & Without a Will
- Online Dating Safety Guide for Men and Women
- Sexual Abuse in the U.S.: Laws and Statistics
- Supporting Children After Divorce: Child Custody Options
- Halloween Horrors Come to Life: Holidays Crimes in the U.S.
- Charity Scams in the U.S.: Be Aware and Protected
- Webcam Hacking & Spying in the US
- Freedom of Religion in the U.S.
- Senior Financial Scams: How are the Elderly Targeted and How to Avoid It
- Catcalling: Is it illegal? How to Deal With It
- A Complete Guide To Insurance Fraud: Common Types and Prevention
- Sextortion: What to Do if You Became a Victim of Blackmailing
- Concealed Carry: How to Protect Yourself on Campus
- Debt Collection Laws | Fair Debt Collection Act: What You Need To Know
- How Much Is My House Worth? Ultimate Guide to Home Buying and Selling
- Traits of Sociopaths, Are They Dangerous and How to Deal With Them?
- Who Are Your Neighbors and How to Find Out About Them
- Learn How to Find Your Birth Parents
- The Importance of Public Records in Law
- What's The Difference Between a Jail And a Prison?
- Homeowner's Insurance Coverage & Common Claims
- The Disturbing Facts of Gun Violence in America
- How to Use Public Records in Marketing
- Best & Worst Cities for Driving
- LGBT Bullying
- A Parent's Guide to Keeping Your Child Drug-Free
- What You Need to Know When Buying or Selling a Used Car
- Guide to Filing for Bankruptcy
- Making Your DMV Experience Fast And Easy
- How to Appeal the Court's Decision
- How to Fight a Traffic Ticket?
- How to Prepare For an Active Shooter Incident
- How to Protect Yourself Against Cyber Attacks
- How to Report a Crime?
- Keeping Your Neighborhood Safe For Your Family
- School Safety and Security Standards
- 50 Things to Know When Filing for Divorce
- Tips for Back-to-School Safety and Security
- A User's Guide to Warrants
- What to Do When You Are Stopped By the Police
What Are the Different Types of Bankruptcies and Which One Is Right for You?
Bankruptcies are filed when people and organizations default on their debt. Whenever a person or entity has unresolved debt, their credit rating goes down, they are targeted by collectors, and there may be liens placed on their assets. Filing for bankruptcy allows the defaulted borrowers to wipe their slate clean under certain conditions set by bankruptcy courts. While never an easy way out of debt, bankruptcies stop collections activities and bring balances down to zero, which can allow you to reset and work toward a better financial future.
What Are the Types of Bankruptcies?
There are several different bankruptcy types, and they differ from one another in significant ways:
- Chapter 7 - Liquidation: Sells non-exempt assets to discharge most debts.
- Chapter 9 - Municipalities: Allows cities or towns to reorganize debts.
- Chapter 11 - Reorganization: Used by businesses or individuals to restructure debts.
- Chapter 12 - Farms and Fisheries: Tailored for family farmers and fishermen to reorganize debts.
- Chapter 13 - Repayment Plan: Enables individuals to repay debts over 3-5 years while keeping property.
- Chapter 15 - Foreign Cases: Handles cross-border insolvencies involving assets in multiple countries.
Understanding different bankruptcy types can help you if you ever accrue an unmanageable amount of debt or explore bankruptcy records to learn more about a potential employee, tenant, or borrower.
Chapter 7 Bankruptcy - Liquidation
The simplest and most common bankruptcy type is the Chapter 7 bankruptcy. A person who wants to file for Chapter 7 bankruptcy can list the exempt property when filing and, if uncontested for 30 days, will be protected from seizure as part of the bankruptcy process.
A court-appointed trustee then distributes the remaining assets. The trustee can sell these assets and distribute the revenue to creditors that were owed money. The debtor is released from most debt liability in exchange, but the bankruptcy is listed on their credit report for up to ten years, and the credit score drops dramatically. Still, you can rebuild your credit score over a few years with time and sound financial decisions.
A surprising statistic about Chapter 7 bankruptcies is that the trustee closes the case in almost 99% of individual bankruptcy cases without selling anything that belonged to the debtor. This is because you request exemptions for any assets that you need for daily life, like primary cars and houses.
Chapter 9 Bankruptcy – Municipalities
Chapter 9 Bankruptcy is the rarest type of bankruptcy, with less than 200 occurring in the US per year. It is reserved for municipalities that are struggling financially and allows them to reorganize what they owe and get some relief from their lenders. Examples of this relief include:
- Refinancing the debt to achieve better terms, such as a lower interest rate
- Reducing the principal amount of the debt in order to settle it faster
- Lowering payments, usually through extending the duration of the repayment terms
While rare, occasionally, municipalities struggle with debt, and allowing them the option of filing Chapter 9 bankruptcy can help them recover over time.
Chapter 11 Bankruptcy – Reorganization
Businesses often use Chapter 11 bankruptcy, but it is also available for individuals. In this bankruptcy structure, commonly referred to as business bankruptcy when applied to companies, the debtor proposes a reorganization of finances with the goal of repaying their creditors over a specified period of time. The court considers the proposal and approves or denies it. If the court approves it, the debtor needs to follow the reorganization plan and make payments to creditors.
Filing Chapter 11 can help collection activities stop and, in some cases, can allow the debtor to seek other financing. Like Chapter 7 bankruptcy, Chapter 11 also stays on one’s credit report for ten years.
Chapter 12 Bankruptcy – Farms and Fisheries
Chapter 12 bankruptcy is very similar to Chapter 11 – it also requires the debtor to reorganize to repay debt. Chapter 12 is unique in that it was explicitly introduced to assist farming and fishing businesses. The business has to be generating revenue, and at least a portion of the debt needs to be from farming or fishing business activities. This bankruptcy type stays on your credit report for up to ten years.
Chapter 13 Bankruptcy – Repayment Plan
Chapter 13 bankruptcy is a structure that allows for steady repayment of some, or all of the debt owed. Best in situations where an individual or company still has income coming in, this bankruptcy type allows the court to set the repayment plan based on your financial situation.
Under Chapter 13, all of the debtor’s disposable income is used to repay debt. The only exempt earnings are those needed to cover living basics, like food, shelter, transportation, clothing, and healthcare expenses. One advantage of Chapter 13 over Chapter 7 is that the Chapter 13 bankruptcy is only on your credit report for seven years.
Chapter 15 Bankruptcy – Foreign Cases
Unresolved debt does not just occur in the US and is not limited to the borders of one country. Chapter 15 bankruptcy was introduced in 2005 to help aid cooperation between bankruptcy courts in different countries. When bankruptcy occurs internationally and US assets or residents are affected, a Chapter 15 bankruptcy may be filed.
This bankruptcy type originated from a UN recommendation, and currently, 48 countries have adopted the same or similar measures. Having an international option for bankruptcy helps to reduce the risk for creditors of foreign entities.
Whether you are in a situation where you need to resolve a large amount of debt or if you are trying to understand the bankruptcy records of other individuals and organizations, it helps to understand that the six main types of bankruptcies all have their unique structures and rules.
Which Type of Bankruptcy Is Right for Your Situation?
When it comes to filing for bankruptcy, most people find themselves choosing between Chapter 7 and Chapter 13. Here’s a quick breakdown to help you decide:
- Chapter 7 is ideal if you have a low income and few assets. It’s a faster process where your non-exempt assets are liquidated to pay off debts, and the rest is discharged. But you need to pass a means test to qualify—too much income, and you might be directed toward Chapter 13 instead.
- Chapter 13 works better if you have a steady income and want to keep your property. This option allows you to repay your debts over three to five years while catching up on missed payments for secured debts like a mortgage or car loan.
The choice between Chapter 7 and Chapter 13 often hinges on your income level and what you want to protect. If you’re worried about losing your home or other important assets, Chapter 13 might be your best bet. On the other hand, if speed and wiping out debt are your priorities, Chapter 7 could be the way to go.
Deciding which type of bankruptcy is right for you isn’t easy. It’s often worth consulting with a bankruptcy attorney who can help you navigate the complexities and find the best path forward based on your specific financial situation.
Bankruptcies are not one-size-fits-all, and the nature of the financial struggles will dictate which one is the best option. To navigate bankruptcies, you can seek a bankruptcy lawyer’s advice or speak to a Certified Public Accountant (CPA).
The main takeaway is that while bankruptcies are unpleasant, time-consuming, and require debtors to make significant changes, they gradually allow individuals and businesses to get to a clean slate. Individuals and companies alike have been able to recover their financial positions over time and set new goals.
Bankruptcies can change over time, so it is essential to conduct timely research when you need relevant information. Often seen as a last resort, in some cases, bankruptcies can be more advantageous financially than continuing to carry unrealistic amounts of debt.
FAQ
What Is the Difference Between Chapter 7 and Chapter 13?
Chapter 7 and Chapter 13 are the most common types of personal bankruptcy. Chapter 7 is a liquidation process where non-exempt assets are sold to pay off creditors, and most remaining debts are discharged. It’s typically faster and is often chosen by those with lower income and few assets. Chapter 13, on the other hand, is a reorganization process where you keep your assets and create a repayment plan to pay off your debts over three to five years. It’s suitable for individuals with a steady income who want to protect their property, such as a home or car.
What Type of Bankruptcy Is Best?
The best type of bankruptcy depends on your financial situation. Chapter 7 is usually best if you need a quick resolution and have limited income and assets. Chapter 13 is better if you have a stable income and want to keep your property while repaying your debts over time. Chapter 11, often referred to as a business bankruptcy, is typically used by businesses for reorganization, and Chapter 12 is designed for family farmers and fishermen. Consulting with a bankruptcy attorney can help you determine which option is best for you.
Which Type of Bankruptcy Will Most Individuals File For?
Most individuals file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is more common because it’s faster and discharges most debts without requiring repayment. However, Chapter 13 is also widely used by those who have sufficient income to repay their debts and want to avoid losing significant assets like a home.
Are There Any Differences in the Bankruptcy Process Across Different States?
Yes, there are differences in the bankruptcy process depending on the state. While the basic federal bankruptcy laws apply nationwide, states have their own rules regarding exemptions—what assets you can keep during bankruptcy—and other procedural details. For example, the amount of home equity you can protect (homestead exemption) varies by state. It's crucial to understand your state’s specific laws when filing for bankruptcy.
What Happens if Someone Is Considering Bankruptcy but Their Debt Doesn’t Neatly Fall Into One of These Categories?
If your debt situation doesn’t fit neatly into Chapter 7 or Chapter 13, you may need to explore other options or consult with a bankruptcy attorney. There are specialized types of bankruptcy, like Chapter 11 for businesses or Chapter 12 for farmers and fishermen. In some cases, alternative debt relief options, like debt consolidation or negotiation, might be more appropriate than bankruptcy. An attorney can help assess your situation and recommend the best course of action.