What Type of Bankruptcy is Best for My Situation?

Your Rights and Options When You Need to File for Bankruptcy

  Whether you are drowning in debt because you cannot find stable work or the death of a loved one has created an unbearable financial hardship, the decision to file bankruptcy can be overwhelming. You deserve to live a life unburdened by collection calls and risks of foreclosure. Filing bankruptcy can help you achieve financial freedom and help you get back on your feet.   At Debt Doctors of Missouri, we help people understand their rights regarding bankruptcy. Our dedicated team of attorneys knows how quickly debt can feel insurmountable. We help people overcome financial difficulties through strategic legal solutions. Our lawyers will help you decide which type of bankruptcy would be the most beneficial and guide you through the process at a cost you can afford   If you are planning to file for bankruptcy or would like to know your options, contact our office at (417) 466-3328 for a free consultation. 

Chapter 7 Bankruptcy

Chapter 7 bankruptcy or liquidation bankruptcy is the most common type of bankruptcy filed. It is usually the fastest form of bankruptcy and costs the least amount of money. It allows you to retain most of your assets, including your car or house while discharging most of your unsecured debts.   

Who Is Chapter 7 Bankruptcy Best For?

Chapter 7 bankruptcy is best for individuals with large amounts of unsecured debt who do not have significant assets. While certain assets may be exempt such as your home, other assets may be liquidated by the court to pay off your creditors.    High earners are likely ineligible for Chapter 7 bankruptcy since they would be unable to pass a “means test.” Additionally, people with high-end assets may seek to file a different form of bankruptcy to protect their non-exempt property and other items.

What Are the Benefits of Chapter 7 Bankruptcy?

There are significant benefits to filing for Chapter 7 bankruptcy. It generally only takes a few months to complete and can help you get back on track financially.    Benefits of Chapter 7 bankruptcy include:  
  • It is the quickest and easiest form of bankruptcy.
  • It stops creditors by placing an “automatic stay” on collection efforts.
  • Certain assets (such as your home and vehicle) may be exempt from bankruptcy.
  • It discharges most of your unsecured debt, including credit card debt, medical debt, payday loans, etc.
  While there are many advantages to filing Chapter 7 bankruptcy if you have substantial amounts of unsecured debts, it is always strongly recommended that you consult with a bankruptcy attorney before filing. 

What Are the Disadvantages of Chapter 7 Bankruptcy?

As with any form of bankruptcy, filing for Chapter 7 can be complicated. You should always speak to an attorney to help determine which type of bankruptcy will best protect your assets and help you get out of debt.   Disadvantages of Chapter 7 bankruptcy include:  
  • High-income earners may be ineligible.
  • Nonexempt property and assets may be liquidated and sold to repay creditors.
  • It puts a pause on foreclosure efforts but does not permanently stop them. 
  Despite Chapter 7 bankruptcy offering protections for exempt property, it does not permanently stop the foreclosure process on your home. To keep exempt assets such as your house, you will need to get current on your payments. With the help of a bankruptcy lawyer, you might be able to negotiate a more reasonable payment or interest rate.  

Chapter 11 Bankruptcy

Individuals and businesses can use Chapter 11 bankruptcy. Unlike a Chapter 7 liquidation, a Chapter 11 bankruptcy is considered a reorganization. It is often utilized by companies that need to remain operational while reducing debt and paying off creditors.

Who Is Chapter 11 Bankruptcy Best For?

Chapter 11 bankruptcy is frequently used by corporations, sole proprietorships, and partnerships. It is mainly designed to assist businesses in staying operational while going through a reorganization.

What Are the Benefits of Chapter 11 Bankruptcy?

While filing for Chapter 11 bankruptcy can be complex and should be handled by an attorney, it can significantly help struggling businesses.  Benefits of a Chapter 11 bankruptcy:
  • Business can remain open and operating;
  • An automatic stay is placed on debt collection;
  • Companies may still borrow money if approved by the court;
  • The reorganization generally results in more favorable payment terms; and
  • There are no debt limits.
  Chapter 11 bankruptcy can benefit both individuals and businesses. At Debt Doctors of Missouri, we have helped thousands of small business owners reduce their debt and secure a stable future using Chapter 11 bankruptcy.

What Are the Disadvantages of Chapter 11 Bankruptcy?

Chapter 11 bankruptcy is more expensive than other forms of bankruptcy and may take longer. It has extensive legal requirements that can cost time and money if not met. Without the assistance of legal counsel, it can be challenging to get a reorganization plan confirmed by the court.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is an important option for individuals who do not qualify for Chapter 7 bankruptcy or have significant assets that they want to protect. It is often called a “wage earners” bankruptcy since it allows individuals with a stable income to reorganize and repay debts.   

Who Is Chapter 13 Bankruptcy Best For?

Chapter 13 bankruptcy is best for individuals who do not qualify for Chapter 7 because of their income or those who want to protect nonexempt assets from liquidation. 

What Are the Benefits of Chapter 13 Bankruptcy?

Benefits of Chapter 13 bankruptcy include that there is no income requirement. It also allows you to retain property that might be liquidated and sold in a Chapter 7 bankruptcy. Finally, upon completion of the repayment plan, many secured debts are reduced, and some debts are discharged.

What Are the Disadvantages of Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a longer and more complicated process compared to Chapter 7 bankruptcy. It does not immediately discharge debts and can take three to five years to complete.

Contact a Bankruptcy Lawyer Today

If you are considering filing for bankruptcy in Missouri, contact our office at (417) 466-3328  for a free, no-obligation consultation. The attorneys at Debt Doctors of Missouri have helped individuals reduce or eliminate millions of dollars in debts. Call now to get started.

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