Filing for bankruptcy is an accepted action when an individual or a company experience difficulty in paying any existing debts. Instead of incurring interest rates of unpaid debts, an individual or company can file for bankruptcy. Once approved of the case filed, debts are other waved off totally or paid at a more convenient terms. Since there are many applicants filing for bankruptcy, the law has divided the qualification into different classifications. The application is categorized based on the current status of the applicant and the magnitude of the existing debt.
An individual can file for Chapter 7 Bankruptcy to clear any debt that he or she is unable to pay. chapter 7 bankruptcy information states that applicants who file under this should prove that they have no sufficient funds to pay for the debt and no fixed income that will cover their expenses. This is the most severe case of bankruptcy that an individual can apply for. Companies can also qualify for Chapter 7 as long as all requirements are met.
Those who disqualify in Chapter 7 can file for Chapter 13 Bankruptcy. chapter 13 bankruptcy information states that an individual who is in debt but has continuous income can file for Chapter 13 bankruptcy.Under this category the terms will be discussed where the debtor and the company that the individual owes will agree upon. Usually, Chapter 13 cases require debtors to pay for the debt in a period of 5 years without any additional interest. Most of the time, the court requires the individual to pay just a portion of the debt to stay clear of the debt.
Meanwhile, corporations and big companies that do not fall for Chapter 7 and Chapter 13 can file for Chapter 11 Bankruptcy. chapter 11 bankruptcy information states that corporations who are planning to restructure their existing debts can file for this category. Bonds and shares are usually liquidated to pay for the debt. Corporations spend lots of money to file for this as there are more requirements compared to other types of bankruptcy. Also, the process is longer compared to the other types of Bankruptcy.
