Did you know that from 2010 to 2011, bankruptcy filings in the United States decreased by 182,000? However, one out of every 70 households in the U.S. still files for bankruptcy. But why file for bankruptcy? Bankruptcy is one of the most effective ways to decrease or eliminate debt, and there are several bankruptcy chapters available.
1. Chapter 7. This is the simplest and quickest form of bankruptcy, and as a result, 84% of bankruptcy filings in Michigan in 2011 were Chapter 7. Chapter 7 bankruptcy involves the liquidation of assets, such as houses and cars, which are used to fulfill all debts. Although Chapter 7 bankruptcy completely eliminates your debt, you could permanently lose your most valuable assets.
2. Chapter 11. Chapter 11 bankruptcy is typically filed by businesses. Chapter 11 allows businesses to implement debt repayment plans, and while businesses are paying off their restructured debts, they are allowed to remain open. This means that just because a business files for bankruptcy, it does not have to cease all operations.
3. Chapter 13. Unlike Chapter 7 bankruptcy, which liquidates your assets, Chapter 13 bankruptcy allows you to restructure your debt so that you are able to pay it off. However, in order to file for Chapter 13 bankruptcy, you must prove that you have enough income to pay off your debt. As a result, 16% of bankruptcies filed in Michigan in 2011 were Chapter 13.
Why file for bankruptcy? It is often beneficial to file for bankruptcy because it gives you the opportunity to reduce or eliminate your debt. Chapter 7, 11, and 13, for example, are three common types of bankruptcy that are beneficial in their own ways. By choosing the option that is right for you, you will no longer be consumed in debt. Find out more at this site.