Thanks in large part to the Great Recession, Americans are living in more financial distress than ever before. As ABC News writes, 76% of Americans are living paycheck to paycheck, often unable to pay the most essential of bills. This is likely the main reason why bankruptcy filings have been increasing over the last couple of years.
According to the American Bankruptcy Institute, California alone had nearly 50,000 bankruptcy filings in Q2 of 2012. Oregon had over 12,000 from Q1 to Q3 of 2012. In July 2013, there were 87,684 bankruptcies filed across the United States. Clearly, Americans need help. If you are one of the thousands of Americans asking “can I file for bankruptcy”, then there are many things you need to consider. Namely, you need to know what sort of bankruptcy you may be eligible for.
Common Types of Bankruptcy
Did you know that bankruptcy is written into the United States Constitution as a fundamental right? However, not everyone is eligible for every type of bankruptcy. The Federal Bankruptcy Rules regulate how bankruptcies occur and what their individual filing requirements are. Three of the most common types of bankruptcy regulated by this process are Chapters 7, 11, and 13.
- Chapter 7 Bankruptcy Laws
- Chapter 11 Bankruptcy Laws
- Chapters 13 Bankruptcy Laws
When most Americans ask “can I file for bankruptcy”, they are specifically asking about filing Chapter 7 bankruptcy. If successful, private individuals can win protection from common sources of financial debt. For instance, medical bills and credit card debt are most commonly absolved through Chapter 7 proceedings. However, all Americans need to be aware that Chapter 7 bankruptcy is not a cure-all. In most cases, bankruptcy of this nature will not eliminate any student loan debt.
Unlike Chapters 7 and 13, Chapter 11 bankruptcy code is aimed toward businesses instead of private individuals. As any reputable source of Chapter 11 bankruptcy information can point out, this form of bankruptcy is sought by businesses who are looking to restructure and repay their debts. This is not a form of absolution but, instead, a way of making the debt easier to pay.
Filing Chapter 13 bankruptcy yields something of a hybridization of results, pulling characteristics from both Chapters 7 and 11. Like Chapter 7, Chapter 13 bankruptcy is a form of protection extended to private individuals. However, like Chapter 11, Chapter 13 does not absolve Americans of their debts. Rather, it helps individuals and lenders come to an agreement so that the individual can pay down the debt sensibly.
If you are one of the thousands of Americans asking “can I file for bankruptcy”, then keep these three types of protections and their characteristics in mind. Next, you need to find an experienced bankruptcy lawyer who can help you gain the benefits of filing bankruptcy. While that may cost you some money, it is far better than resting on your laurels and waiting for the problem to go away. For more information see this.