Chapter and verse on bankruptcy types

Bankruptcy is a term for a federal court procedure that allows consumers and businesses to rid themselves of most types of debt and/or to repay creditors. There are different types of bankruptcies, and they are categorized as either liquidations or reorganizations.

Filing for bankruptcy will cost you $275 to $335. There are other fees that may apply. They can be as little as 10 cents for photocopies or as much as $298 to file an appeal. If you decide to work with an attorney, the cost will be much higher. The average cost in the U.S. for a bankruptcy attorney is $1,250, payable in advance.

If you are able to prove that paying filing fees would cause significant financial hardship, most courts will allow you to pay fees in installments instead of a lump sum.

Chapter 7 is known as straight bankruptcy, complete bankruptcy or liquidation. It is the most common type of individual bankruptcy. When you file Chapter 7, a trustee collects your nonexempt assets to sell them. The trustee then distributes the money to your creditors.

You should consider Chapter 7 if you have absolutely no way of paying back your debts or if creditors are beginning to take court action against you.

Chapter 13 bankruptcy is sometimes referred to as a “wage earner’s plan.” Under Chapter 13, a debtor with a regular income can propose a plan to repay all or part of his debts over three to five years. Chapter 13 offers the opportu nity to save a home from foreclosure and may even take care of delinquent payments. However, the debtor must continue to make monthly mortgage payments on time.