Selecting the Right Type of Bankruptcy

David Gomez and the professionals at Platinum Law Group help their clients with bankruptcy issues and estate planning. Platinum Law Group and David Gomez have advised many clients on bankruptcy issues.

Debtors who initiate the filing for bankruptcy can choose to file in multiple ways, with the most common for individuals being Chapter 7 and Chapter 13. In Chapter 7 bankruptcy, all assets are liquidated and as much debt is paid off as possible. The proceeds from these sales are given to creditors such as banks and credit card companies. Within four months of liquidation, the filer receives a notice of discharge. 

Chapter 7 bankruptcy does not protect any assets, so people who want to keep a family home or a company should think carefully before they file Chapter 7. People with few assets should consider Chapter 7 as the preferred type of bankruptcy.

In Chapter 13 bankruptcy, filers who have a consistent annual income can retain some assets and pay off as much debt as possible within a period of three to five years. After completing this repayment period, any remaining debts are discharged. 

A Chapter 13 bankruptcy provides some protection from creditors during the repayment period. Debtors should choose this form of bankruptcy if they have assets they need to protect, such as a house.