August 17, 2022

Types of Bankruptcies in Orlando

Burdening yourself with huge debts can be overwhelming. With the increased cost of living and the need for a better lifestyle, people end up falling victim to accepting easy credits. This is the major cause why people end up with huge debts and have to file for bankruptcy. If you are struggling to pay off your debts, then bankruptcy is the best option for you. It will also stop creditors from hounding you for debt collection. Bankruptcy provides the person with an opportunity to make a fresh financial beginning by removing debts that cannot be paid. 

What are the types of bankruptcy in Orlando? Check out the points mentioned below: 

Chapter 7 bankruptcy: In this situation, the debtor liquidates the non-exempt assets to pay off creditors. A chapter 7 debtor has large unsecured debts like credit card debt, medical bills, etc. Such a debtor is without a regular income, fewer assets, or no assets at all to pay their consumer debt. The trustee determines if the debtor has any secured assets that can be sold to repay the unsecured debt. In this bankruptcy, the debtor can reaffirm the debt too. In this case, he keeps making payments to keep the assets. Filing for chapter 7 bankruptcy automatically prohibits creditors from filing lawsuits, sending a written communication, and making phone calls to the debtor. The trustee notifies all creditors about the bankruptcy filing. 

Chapter 11 bankruptcy: This is a complicated and expensive bankruptcy case. This is often filed by large and medium-scale businesses as it involves debts of massive amounts. Large corporations generally file this bankruptcy to reorganize the business through debt restructuring, changes in product pricing, or the sale of non-core assets. The debtor is also asked to submit the reorganization plan to the court. If there is an instance of dishonesty or fraud, then a court-appointed trustee is tasked with managing the business operations during proceedings. 

Chapter 13 bankruptcy: This type of bankruptcy focuses less on eliminating the debts and more on reorganizing finances to make payment of debt manageable. Debtors with a regular source of income create a financial plan to repay all or a part of their debts to creditors over 3-5 years. In this case, the secured creditors will get back all the money, but the unsecured creditors will receive a portion of disposable income, as mentioned in chapter 7 bankruptcy. 

Filing for bankruptcy is an extreme step. This is the last resort in case you have a huge debt that you cannot pay off. You must take the help of a legal attorney who will guide you on whether to file it or not, when to file and which chapter is best suited to meet your interests. 

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