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Chapter 7, 11 and 13 Bankruptcies

While you might understand the basics of filing for Chapter 7, 11 and 13 bankruptcy, the reality is much more complex. Steiner Law Group, LLC offers guidance throughout the bankruptcy process for both straightforward and complex cases.

Chapter 7 Bankruptcy

It’s safe to think of Chapter 7 bankruptcy as a fresh start. All debts will be wiped clean from the slate, and you will be starting again from scratch. A trustee will gather all assets and sell any non-exempt assets to fulfill debts. The net proceeds of the liquidation process will be given to creditors.

A number of debts cannot be eliminated using Chapter 7 bankruptcy, including alimony, child support, student loans, certain tax responsibilities and fraudulent debts.

Some secured debts, like a car or home, can be retained by signing a voluntary agreement to reaffirm those debts. If you do choose to reaffirm debts, you cannot bankrupt that same debt again for 8 years. Reaffirmation also requires bringing the debt “current” if you have missed payments. Another common type of bankruptcy is Chapter 13 bankruptcy.

A trustee will attempt to seize any assets you may have, but Steiner Law Group, LLC can advise you on how to exempt those assets and other strategies to prevent the trustee from taking anything.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is typically used by businesses, but it can be used for small business owners or specific individuals. Chapter 11 allows the restructuring of debts so that they can be repaid over time. When filing Chapter 11 bankruptcy, the business can remain active while repaying creditors.

In this type of filing, the debtor will have a set time frame to develop a reorganization plan and determine when each creditor will be repaid. Unlike Chapter 13, Chapter 11 has no limit on the amount of debt that is restricted. That is why it is used by large corporations and businesses that need to handle a great deal of debt.

Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, a debtor will develop a 3-5 year repayment plan and present it to the creditors, to the trustee and to the Court. This plan can offer to pay off the entire sum or a portion of debts from the debtor’s future income. Depending on the situation, Chapter 13 bankruptcy can be used to prevent a foreclosure and allow you to pay back any amounts owed on a mortgage, become current with missed car or mortgage payments, pay back taxes, prevent interest from being added to tax debt, retain non-exempt property and more.

Providing that you follow the terms of the agreement, all dischargeable debt will be released at the end of the 3-5 year term. In a Chapter 13 bankruptcy, the repayment amount must be equal to or greater than the amount that creditors would receive in a Chapter 7 filing, and the debtor must have regular income.

Which Type of Bankruptcy Should You File?

The decision on what type of bankruptcy to file can be difficult, and Steiner Law Group can assist with your decision. If you are behind on mortgage payments and would like to keep your home, Chapter 13 bankruptcy may be the best option for you. If you make too much income to file for a Chapter 7 bankruptcy, Chapter 13 is also the right option. However, Chapter 7 remains an ideal choice for people with a great deal of credit card debt and few assets. Never file without the advice of a skilled attorney. Chapter 11 bankruptcy is the best choice for businesses needing to restructure large amounts of debt while remaining in operation. Businesses that don’t have as much debt might benefit from other filings instead, so consult with an attorney first.

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Complex Bankruptcies

Steiner Law Group, LLC also offers guidance for complex bankruptcies. To learn more about the differences between each type of bankruptcy and filing in the state of Maryland, please contact Steiner Law Group today.

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