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However, there are several different types of bankruptcy.
The different types of bankruptcy and what is best for you
In Kansas, there are different types of bankruptcy filings allowed depending on the particulars of the circumstances.
- Chapter 7 bankruptcy – Chapter 7 bankruptcy is known as fresh start bankruptcy. As the name suggests, you will basically get a second chance at your financial life if you able to successfully file for chapter 7 bankruptcy. Courtesy of a chapter 7 bankruptcy, loans and debts such as credit card debts, prior tax debts, personal loans, etc. can all be wiped clean and you don’t have to pay them back.
- However, not everyone is eligible for Chapter 7 bankruptcy. Chapter 7 bankruptcy is meant for individuals who are low wage earners or those who have no source of steady income and therefore have no resources to pay off their loans.
- Chapter 13 bankruptcy – For those that have a steady income, it is not likely that they will qualify for chapter 7 bankruptcy. Since they do have some means of being able to pay the loan back, they cannot qualify for chapter 7, instead they can file for chapter 13 bankruptcy.
- Chapter 13 bankruptcy is a restructure bankruptcy where you get to negotiate with the creditor and work out a repayment plan which is easier for you to bear. This usually works out as smaller installments for a longer period which is more sustainable.
- Chapter 11 bankruptcy – Chapter 11 bankruptcy is meant mostly for businesses and companies. When a company is no longer able to pay their employees or their taxes, then they should file for chapter 11 bankruptcy. Chapter 11 bankruptcy basically will allow the company and its board members to reorganize and come up with an effective plan to keep the ship sailing.
- Chapter 12 bankruptcy – Chapter 12 bankruptcy is similar to chapter 13 bankruptcy in the sense that it allows for the borrower and the creditor to find some middle ground in terms of payment plans. However, the difference is that Chapter 12 bankruptcy is meant exclusively for farmers and fishermen who are offered certain additional benefits.