For those who are facing foreclosure or are attempting to repay hundreds of thousands of dollars of debt, bankruptcy can be a viable option that offers relief. Although it may be the best option for those in difficult financial situations, it’s important to know the differences between the various types of bankruptcy. Knowing which type is most specific to your situation and has the most benefits can prevent loss and help regain your future. McLay & Company Inc Trustee In Bankruptcy, experts at helping people with claiming bankruptcy in Ontario, recommends that people get a clear understanding of the different types available so they will know what type will fit their situation the best.
Chapter 7
Those who file Chapter 7 bankruptcy are looking for immediate relief from their debts, which involves liquidation of all nonexempt property. The proceeds from the property are then paid to the lenders, allowing the debtor to receive immediate relief and a financial fresh start. Those who apply for Chapter 7 must first qualify and earn a certain amount of income before filing a petition. This type of bankruptcy is the most common, but will stay on the individual’s record for 10 years and limit their ability to use credit.
Chapter 9
Chapter 9 bankruptcy is a common option among individuals who agree to a repayment plan to resolve their outstanding debt. This often works in the debtors favor by lowering interest rates or the amount of money that is owed. In some cases, the assets may be liquidated, but the creditor cannot force the action.
Chapter 11
This type of bankruptcy is not as common for individuals, but is used more by corporations who agree to repay their debt over time. This form of bankruptcy can be utilized by both individuals and businesses who take the first step and make the initiative to file for bankruptcy themselves with the help of financial professionals who can explain each option and the debtor’s rights.
Chapter 13
Chapter 13 is most ideal for those who are still willing to repay their debts over a specific time period, which is usually between three to five years. It’s ideal for those who want to avoid losing a home or their vehicle while they agree to a payment plan.
For individuals who are looking from relief from outstanding debt, there are several bankruptcy options available that can work to your advantage. Although all of the types of bankruptcy have specific terms and qualifications that must be met, each works to benefit the debtor and help them regain their financial standing in the future.
