There are two common types of personal bankruptcy in the U.S. They are called Chapter 7 bankruptcy and Chapter 11 bankruptcy because of their location in the bankruptcy code. If one considers filing for bankruptcy, a bankruptcy attorney will help determine the best option after reviewing assets, debts, life situation, and local and federal law.
A filing under Chapter 7 is called liquidation, and it is the most common. In a chapter 7 proceeding, a trustee collects the non-exempt property of the debtor, sells it, and distributes the proceeds to creditors. A personal bankruptcy attorney helps the debtor identify the proporty which is exept. An attorney is important for the debtor to protect his/her house, car, and other property. Under Chapter 13 a trustee supervises the assets of the debtor and payment replans are set.
Bankruptcies are often entered into voluntarily by the debtor, but bankruptcy proceedings can be initiated by creditors. Either way, once a bankruptcy filing is made, creditors can no longer seek to collect debts outside of the bankruptcy process.
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