When a person is considering bankruptcy, there is more to consider than whether or not to file. There is also the question of which type of bankruptcy to file for. In Ventura, the most common forms of bankruptcy are chapter 7, 11, 12, and 13. Each type of bankruptcy is filed under different circumstances. An attorney for bankruptcy in Ventura can help in determining which type of bankruptcy to file.
Chapter 7
For a chapter 7 bankruptcy, it requires a complete liquidation of any and all assets. This is why it is often called liquidation bankruptcy. During this type of bankruptcy, a bankruptcy trustee is assigned to the case and is responsible for selling the assets in order to pay of as much money to the creditors as possible. Items to be sold are only the non-exempt assets. The downside is that all non-exempt assets are sold, but the upside is that all income earned after the chapter 7 bankruptcy is kept by the person who filed for bankruptcy.
Chapter 11
A chapter 11 bankruptcy is mainly for businesses. For this type of bankruptcy, the business continues to operate but has to come up with an approved plan for changing their business model so that they can pay off their creditors. It may involve selling some assets or divesting some parts of the business in order to operate more efficiently.
Chapter 12
Chapter 12 bankruptcies are primarily bankruptcies for farmers. During this type of bankruptcy, the farmer is allowed to keep their assets but must come up with a plan to repay their creditors. In some cases, the creditors will offer a lesser amount or reduced interest in order to help the farmer get out of debt faster.
Chapter 13
Finally, there is chapter 13 bankruptcy. This type of bankruptcy is very similar to chapter 11 bankruptcy. The debtor is granted the ability to hold onto their assets but must come up with a plan to pay back all of the debt over a longer period of time. This will of course reduce the amount owed each month which will allow the debtor to get out of the vicious cycle faster.
Filing for bankruptcy is a definite option for any person who is facing a financial crisis. It is important to understand that a bankruptcy is not just an easy out. There is a lot of investigation that takes place by a trustee for bankruptcy in Ventura to ensure that all of the rules are followed, and the person is being honest. If a person is not completely truthful in all of their information on assets and liabilities, then this will certainly lessen the chance of getting approved for bankruptcy. On the other hand, if a person is honest and upfront about all of their information then there is a much greater chance of getting approved.
