There are two primary types of bankruptcy protection that fall under the umbrella of personal bankruptcy protection. Both provide an opportunity for debt relief and can help the filing party pursue greater financial freedom so those considering personal bankruptcy protection should be familiar with their options.
In addition to the similarity that they both provide important debt relief, there are some differences, however, in how the different types of personal bankruptcy options operate and how to qualify for one over the other. The availability of different types of bankruptcy options is dependent on the income of the filing party and also their needs and goals for the process.
Struggling consumers who have a reliable source of income may be able to file for Chapter 13 personal bankruptcy protection which will allow them to repay their debts over time and will not require the liquidation of property. The other option for struggling consumers is Chapter 7 personal bankruptcy protection which allows the filing party to liquidate non-exempt assets to repay creditors and enjoy a fresh financial start. Exempt assets are not subject to the liquidation process so struggling consumers considering their options should be familiar with what those categories and types of property are.
To qualify for bankruptcy generally, the bankruptcy court will look at the filing party’s income to determine if they are eligible to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy. It is important to keep in mind that both options offer the hope of debt relief and freedom from the stress and strain of overwhelming debt. As a result, struggling consumers wondering what their bankruptcy options might be should be familiar with the different types of personal bankruptcy protection so they can select the option that is best for them.