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Types of Bankruptcy

The great majority of personal Bankruptcies proceed under either Chapter 7 or Chapter 13 of Title 11 of the United States Code. Under either of these types of bankruptcy proceedings, the moment your Bankruptcy Petition is filed you are given immediate debt relief and protected by the "automatic stay", which prohibits your creditors from attempting to collect their debt, including taking legal action, garnishment of wages, foreclosure or repossessions of property or eviction.

CHAPTER 13
       Chapter 13 Bankruptcy, also known as "reorganization or as the "wage-earner plan", allows a person to pay off debts under an installment payment plan administered by a Court-appointed Trustee. Chapter 13 is most helpful to you if you are behind in payments on a house, a car or other property that is subject to foreclosure or repossession.
In a Chapter 13 proceeding, you submit for the Court's approval a three to five year plan and budget under which a certain repaying your creditors. Once all of these payments have been made, most of your debt will be discharged. This plan will allow you to pay off past due mortgage payments on your home at a rate you can afford. This plan also allows you to cure defaults on auto loans, taxes and to certain other debts, and can either reduce or eliminate any of your other debts, such as credit card debt, medical bills, personal loans, utility bills, etc. During this repayment period, your creditors are prohibited from starting or continuing any collection action, and any adverse actions directed against you and your property must immediately stop!
       In order to qualify for Chapter 1 relief, you must have "regular income", which may be from a Salary, Commission, Rents, Pension, Alimony, Child Support, Social Security, Unemployment Compensation or Public Assistance.

CHAPTER 7
       Chapter 7 Bankruptcy, also known as "Straight Bankruptcy" or "liquidation", involves a possible Court-administered sale of any of the debtor's property that is not exempt. If you are not interested in keeping your property, a Chapter 7 would enable you to eliminate any remaining balance that is incurred after the sale of your home by your mortgage company, along with any of your bills, such as credit card debt, personal loans, medical bills, or even overdue utility bills. Under this proceeding, you pay nothing to these creditors, giving you a fresh financial start.

CHAPTER 11 AND 12
       Chapter 11, although commonly used in connection with business reorganizations, is available in some cases for individual debtors will large amounts of debt and in specialized circumstances Chapter 12 is similar to Chapter 13 but is reserved for "family farmers".