Table of contents
Ch. 1: Understanding your debt
Ch. 2: Using equity to consolidate debt
Ch. 3: Reorganizing finances
Ch. 4: When to seek debt help
Ch. 5: The bankruptcy option
Here’s a quick run down of the five most common types of bankruptcy:
Chapter 7: Also known as liquidation, allows individuals or businesses to give up nonexempt assets and walk away from most debts. To qualify, debtors must pass the means test — that is, their income must be less than their state’s median income. For more information on means testing, read ” Understanding the new bankruptcy law.”
Chapter 9: This section works like Chapter 11 and allows municipalities to reorganize debt.
Chapter 11: Also known as reorganization, this type of bankruptcy is for individuals and more commonly, businesses to restructure debt. Similar to Chapter 13, in that it allows the filer to draft a plan to repay some debt while retaining assets. Chapter 11 is much more complicated, and therefore expensive, making it financially feasible mainly for businesses and very wealthy individuals.
Chapter 12: Allows family farmers and fishermen with regular income to reorganize debt. It works very much like Chapter 13, but usually stretches out over three years.
Chapter 13: For individuals who need to restructure their debt load. Some creditors will be paid back in full with interest, others in full and the remainder will be repaid a percentage of the debt. Also used by creditors who do not qualify for Chapter 7 under the means test.