For many people, bankruptcy is the light at the end of a very dark tunnel. With so many people facing ever increasing loads of debt, job loss, and foreclosure, bankruptcy is no longer frowned upon. In 2009, the United States Government reported that 1.4 million people filed for bankruptcy throughout the country. This marked a 32% increase from 2008, meaning that more people were left struggling in a tough economy.

For over one million Americans, bankruptcy served as a solution where many:

  • stopped foreclosure
  • were offered a fresh start
  • eliminated debt
  • provided protection from creditors

If you are considering bankruptcy, current statistics show that you are not alone in your quest to regain control of your finances. The key to getting through the bankruptcy process quickly and efficiently is working with a bankruptcy attorney. At Smothers Law Firm, P.A., we provide guidance, information, and representation to people who are filing for chapter 7 and filing for chapter 13.

Types of Bankruptcy

In the United States, the 2 most common types of bankruptcy are chapter 7 bankruptcy and chapter 13 bankruptcy. Below, we have provided basic information about each type.

Chapter 7 bankruptcy:

The most popular type of consumer bankruptcy, chapter 7 allows people to have their debt discharged if they meet eligibility requirements, complete counseling, and pass a state-issued means test. Once people have decided to file for chapter 7 bankruptcy, they may have to go through liquidation. During liquidations, people’s assets and valuable property are sold and the profit from the items is divided among people’s creditors. While liquidation is a definite drawback, chapter 7 is still ideal for individuals who are looking to eliminate debt.

Chapter 13 bankruptcy:

This is a type of consumer bankruptcy that is commonly pursued by people who are struggling with debt, but make too much money to qualify for chapter 7. Under chapter 13, individuals work with a court-appointed bankruptcy trustee and their creditors to create a reasonable debt repayment plan. This gives people a time span of 3 to 5 years to repay their debt to their creditors and helps people avoid foreclosure and liquidation.

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