In the US law there are a number of new bankruptcy laws being established to keep in check the increasing ocurrances of bankruptcy cases. The new laws enable the debtors and creditors more flexibility in filing bankruptcy orders, how debts will be cleared and instituting who can file what type of bankruptcy. Not every type of bankruptcy is ideal for every debtor and it is crucial that you find the right type of bankruptcy when filing, so you can benefit the most out of the process.

There are 3 common types of bankruptcy:

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common process as it can be filed by individuals or businesses. This type of bankruptcy allows the debts to be wipe clean with little or no repayment.

Under this type of bankruptcy one will see that some of the debtor’s possessions can be exempted and everything not exempted is sold to pay debts.

Once the bankruptcy is approved the persons debts filed under the bankruptcy are cleared.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is similar to Chapter 7 as it can be filed by both business and individuals. It is usually reserved for businesses, though.

This type of bankruptcy is best for those with assets. This chapter is some sort of a repayment plan so that a business can repay the debts while keeping their properties.

Usually this is filed by a business because during the bankruptcy process the business can still remain operational.

Chapter 13 Bankruptcy

Chapter 13 is another repayment plan for individuals only. It allows a person to keep their properties while repaying their debts and keeping away from common collection methods.

Any type of bankruptcy protect a person or business from collection processes. Once bankruptcy is filed creditors must stop all collection processes. Creditors cannot file court charges, send letters to debtors nor to do anything that may harass the debtor.

The choice of what type of bankruptcy to file is really based upon your own financial status. You have to consider your assets and debts. Ultimately one should concerned with the best way to clear your financial problems while at the same time not losing the things you own. In order to best do this you need to look at what property you own that is exempt and if you have any property that is not exempt.

Bankruptcy should not be seen as an avenue to escape from debt. It is intended to be a way to enable you get back on track. It is wrong to just opt for Chapter 7 because the debtor can keep some of their possessions. New laws have prevented many debtors from filing Chapter 7 when they can afford to pay debts.