What is Bankruptcy?
Bankruptcy is a legal protection offered under United States law to protect citizens and businesses of those citizens from unfair lending practices. Bankruptcy provides a way out of debt that, while unpleasant, is better than the alternative. Depending on what chapter you file under, you will be able to liquidate property to pay off debts or restructure your debts.
There are several different types of bankruptcy laid out in the United States bankruptcy code, with the most common being:
- Chapter 7. In Chapter 7 bankruptcies, a company or individual has non-exempt property liquidated in order to pay back some or all of its debt. The money raised from the sale of property is distributed to the company or citizen’s creditors. There are certain exemptions, such as your primary residence and primary vehicle. But if you were deeply in debt and filed for Chapter 7, some of your assets could be sold to pay off part of your debt.
- Chapter 11. Chapter 11 is a restructuring form of bankruptcy primarily meant for companies. In Chapter 11, the company retains ownership of its property and submits a plan for paying off its debts over a period of several years. Many companies are able to come back from this form of bankruptcy as smaller, more focused entities.
- Chapter 13. Chapter 13 is a restructuring bankruptcy for individuals. Like Chapter 11, it allows you to submit a plan to court detailing how you will pay off your debts over a period of three to five years. If at the end of this period the debts are still outstanding, you can refile for Chapter 7.
If you or someone you love is considering filing for bankruptcy, contact the Milwaukee bankruptcy lawyers of the DeLadurantey Law Office, LLC, by calling 414-377-0518.