If you’re struggling to pay your debts, it may be tempting to file for Chapter 7 bankruptcy. However, this might mean that assets such as a car, watch collection or your Florida home will be liquidated. Other debt relief options that may be available.
Reorganize business debts by filing for Chapter 11 bankruptcy
If you operate your business as a partnership or corporation, it may be possible to eliminate, reduce or otherwise reorganize its debts during a Chapter 11 proceeding. Typically, businesses that file for this type of protection from creditors are allowed to operate while their cases are being heard.
A Chapter 11 proceeding may also be ideal if you have unsecured personal debts of more than $419,275 or secured personal debts of more than $1,257,850. A bankruptcy law attorney may be able to provide more insight into the potential benefits of making such a decision.
Chapter 13 bankruptcy may be an option for individuals or sole proprietors
Filing for Chapter 13 bankruptcy allows you to repay secured debt balances over a period of three or five years. In most cases, you’ll be allowed to keep a home, car or other property during the repayment period. Negative equity in a vehicle or second mortgage may be converted to unsecured debt, which means that it may not need to be repaid at all.
Typically, unsecured balances are discharged at the end of a repayment period. It is important to note that you’ll likely need to reaffirm a mortgage, auto or other type of secured loan payment as a condition of retaining the underlying collateral.
If you need help repaying existing debt balances, it may in your best interest to file for bankruptcy. An attorney may be able to talk more about the different options that might be available and help you determine which one best fits your needs.