chapter13bankruptcyinformation.net

Filing bankruptcy is one of the most difficult decisions that a person or family can make. Yet circumstances beyond their control can mount to offer the individual or a family anything but this option. There are a variety of different filing options. Chapter 7 is often preferred because of its liquidation option. However, debtors should be aware that there are several alternatives to chapter 7 relief. One of the most common alternatives is debt settlement options through various credit services or debt counseling services.  These can be effective alternatives to a bankruptcy filing.                          

Debtors who for example who have a business, including corporations, partnerships, or sole proprietorships, may prefer to continue in operation and avoid the liquidation process. Debtors in this situation should consider filing chapter 11 Bankruptcy option. Chapter 11 offers the debtor the ability to seek an alteration of then current debts. This is accomplished by either reducing the debt or by extending the time for repayment. Alternatively a more comprehensive reorganization may also be followed. In the case of sole proprietorships, it’s important to remember that relief should also be considered under chapter 13.

Individual debtors who have some type of regular or stable income may inquire an adjustment of debts under chapter 13. One particular advantage of chapter 13 to consider is that it extends individual debtors with a chance to keep their homes from foreclosure. This is accomplished by permitting them to repay past due payments through a recompense plan. In some cases, the supervising court may dismiss a chapter 7 filing if the debts are primarily consumer rather than business debts. This occurs if the court determines that the chapter 7 code would be abused by granting protection.

There are a number of important factors to consider. For example, a debtor’s current monthly income becomes one of the factors of consideration. This is particularly the case in circumstances in which the debtor’s income is more than the state median. If this is the case, the bankruptcy code requires the application of a means test by the court to determine whether the chapter 7 filing is applicable or may in fact be abusive.