By Matiya Hill
Welcome to this week’s edition of Brown Girl, Green Money! Thank you for joining us again this week and of course thank you all for your continuous support. Today I want to talk about bankruptcy. That topic isn’t a favorite for many people but it’s always a great subject to understand. Bankruptcy is a legal status of a person or entity that cannot repay the debts it owes to creditors. In today’s society bankruptcy is a normal part of the world. This post will discuss the different types of bankruptcies and give general information on the topic.
Chapter 7:
Many people favor chapter 7 bankruptcy because it’s quick, and does not require you to commit a repayment plan. To qualify for relief under chapter 7 the debtor may be a partnership, corporation, individual or business entity. Also your gross income of six months must be less than the median income of your state. The main purpose of bankruptcy is to discharge certain debts to give individuals debtors a chance to start over, financially. Within the chapter 7 bankruptcy all debts cannot be discharged and those debts include: income taxes, income and spousal support, and the dreaded student loan debt. Shout out to Sallie Mae – just kidding! Ok, where was I? Oh yes, before filing a chapter 7 bankruptcy, you may want to ask yourself: Do I own much property? Are my debts dischargeable? Is my income low enough to file for a Chapter 7 bankruptcy?
Chapter 11 and Chapter 13:
Chapter 11 is somewhat different from Chapter 7 bankruptcy. Chapter 11 begins when the party files a petition with the courts where the debtor has a residence. Also, Chapter 11 is usually used to reorganize a business/corporation. This process gives corporations an opportunity to offer profitability plans after bankruptcy, which postpones the payment to creditors. So yes, that means corporations have the chance to propose a plan for profitability after filing Chapter 11 bankruptcy, which may include: finding new sources of revenue and decreasing current costs. Last but not least is Chapter 13, also known as a wage earners plan. Chapter 13 enables individuals with an average income the opportunity to offer a plan to pay back all debt over a 3 to 5 year timespan. An individual is eligible to file for Chapter 13 if the unsecured debts are less than $383,175. Like Chapter 11, Chapter 13 begins when the party files a petition with the courts where the debtor has a residence. The party must also file a certificate of credit counseling and a copy of all debt repayment plans developed through credit counseling. Filing bankruptcy can be tedious task, and hopefully this post has shedded some light on the topic! Before filing for bankruptcy please research, research, and research a little more to find the best option and/resources for you.
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