There are two types of bankruptcy available to most people, Chapter 7 and Chapter 13.
Chapter 7
Chapter 7 bankruptcy is referred to as "straight bankruptcy" or "liquidation," because the debtor's unprotected assets are converted to cash and disbursed to the debtor's creditors to repay part of the debt owed. Any person, partnership and most corporations can file Chapter 7.
Chapter 13
Chapter 13 bankruptcy affords the debtor the opportunity to repay all or part of his debts over an extended time period. This plan requires that the debtor have a consistent income to make future payments for the duration of the plan. Chapter 13 is designed for consumers who need relief from their creditors and collection activity to reorganize their debts and devise a plan to repay them. The debtor is allowed to keep all of his assets, including those not exempt and not mortgaged.
Both types of bankruptcy may get rid of debts where creditors have no specific rights to property, and may stop foreclosures, repossessions, garnishments, utility shut-offs and debt collection activities.
If you need legal advice on filing bankruptcy, here are some basic tips in helping you find an attorney:
- Contact the local bar association Lawyer Referral Service.
- If you can't afford an attorney, contact legal aid services, a university law school with a legal assistance program, or your local bar association for a referral to an attorney who can help you free of charge.
- Look for an attorney who is state-certified or certified in bankruptcy practice.