What is Bankruptcy?

Written By Minh Tong
Nov 16, 2022
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Bankruptcy is a legal process where an individual or business unable to pay their debts can get a fresh start. It allows them to either restructure or eliminate their debt obligations and protect their assets from creditor actions. There are several types of bankruptcy, including Chapter 7, Chapter 11, and Chapter 13.

When someone files for bankruptcy, they will go through a court process in which a trustee is appointed to review financial information and develop a plan for repaying creditors. This may involve liquidating assets and creating a repayment plan over time.

Chapter 7 Bankruptcy

Chapter 7 Bankruptcy, also known as liquidation bankruptcy, involves selling off non-exempt assets to repay creditors. This type of bankruptcy is often chosen by individuals or businesses with few valuable assets and high levels of unsecured debt such as credit card debt.
It is important to note that not all debts can be discharged through bankruptcy, including student loans and some taxes. It is important to consult with a lawyer before filing for bankruptcy to understand the implications and options available.
Overall, Chapter 7 Bankruptcy can provide relief from unmanageable debt and the opportunity for a fresh financial start.

Chapter 11 Bankruptcy

Chapter 11 Bankruptcy, also known as reorganization bankruptcy, is often used by businesses to restructure their debt and continue operations. This type of bankruptcy allows the business to propose a plan to repay creditors over time while still running the business.
It can be a complex process, with oversight from a court-appointed trustee and input from creditors. The ultimate goal is for the business to emerge financially stable and successful.
Some notable companies that have utilized Chapter 11 Bankruptcy include General Motors, Lehman Brothers, and Delta Airlines.
While it can be a difficult decision for a business, filing for Chapter 11 Bankruptcy can allow them to restructure debt and potentially save their company in the long run.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy, also known as individual reorganization bankruptcy, is often chosen by individuals with regular income who wish to repay their debts over time.
In this type of bankruptcy, the individual proposes a repayment plan to creditors that may involve repaying a portion of their debt over three to five years. During this time, they are protected from creditor action and foreclosure proceedings.
This type of bankruptcy can be helpful for individuals looking for relief from high levels of secured debt such as mortgage or car loans. However, it is important to note that not all debts can be discharged through Chapter 13 Bankruptcy, including some taxes and student loans. It is important to consult with a lawyer before filing for bankruptcy to understand the implications and options available.
Overall, Chapter 13 Bankruptcy can provide individuals with the opportunity to restructure their debt and work towards financial stability in the future.

While it can be a difficult decision, filing for bankruptcy can offer relief from overwhelming debt and the opportunity for financial stability in the future. Talk to an Americor debt professional today if you want advice on if filing for bankruptcy is the right path to your financial freedom. You might have more options than you think.

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We provide debt resolution services. Our clients who make all monthly program payments save approximately 40 – 50% of their enrolled debt (average of 43%) upon successful program completion, before program fees. Fees are based on a percentage of your enrolled debt at the time of starting the program and range from 15%-25% of your enrolled debt. Programs range from 20-48 months. Clients must save at least 25% of each debt due to an enrolled creditor before a bona fide settlement offer will be made. On average, clients receive their first settlement within 4-7 months of enrollment and approximately every 3-6 months thereafter from when the prior debt was settled. Not all Clients complete the program. Estimates are based on prior results and may not match your results. We cannot guarantee that your debts will be resolved for a specific amount or percentage or within a specific timeframe. We do not assume your debts, make monthly payments to creditors or provide tax, bankruptcy, accounting, legal advice or credit repair services. Our program is not available in all states; fees may vary by state. Some programs may be offered through The Law Firm of Higbee & Associates d/b/a Advantage Law. The use of debt resolution services will likely adversely affect your credit. You may be subject to collections or lawsuits by creditors or collectors. Your outstanding debt may increase from the accrual of fees and interest. Any amount of debt forgiven by your creditors may be subject to income tax. Clients may withdraw from the program at any time without penalty and receive all funds from their dedicated account, other than funds earned by the company or fees paid to third-party service providers, as may be applicable. Read and understand all program materials prior to enrolling. Certain types of debts are not eligible for enrollment. Some creditors are not eligible for enrollment because they do not negotiate with debt relief companies. To determine the offers you may be eligible for, Americor conducts a “soft credit pull.” This credit pull does not impact your credit score, creditworthiness, or ability to obtain credit from other sources. The soft pull is not a tradeline entry, it does not report against your score and will only take a few minutes.

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