“Bankruptcy” rules were designed by federal court originally with the purpose to empower the debt-stricken people with this weapon, for elimination of their debts. Now-a-days in USA Bankruptcy have become a widely used option for those financially week ones, seeking a relief from their unpaid debt burden which they can barely carry any more. Of course, This option also makes way for them to repay their debts under the bankruptcy court.
What are the types?
In USA, there are mainly 3 kinds of Bankruptcy people may file. These are:
Chapter 7 bankruptcy: This option is mostly used by people, who want to be set free from debt. But, it has a limitation: only for 1 time in six years, Chapter 7 may be filed—not more than that.
Chapter 13 bankruptcy: Compared to Chapter 7, the usage of this option is less; Moreover, its mainly aimed for those debtors who own a stable job, a fixed income & a pre-calculated monthly expense budget…..means whose financial conditions are better than those filing for Chapter 7. But it outranks Chapter 7 with one facility: unlimited chances for filing. A financially depleted individual, who got a huge debt, may file Chapter 13 any time.
Chapter 11 bankruptcy: Its another type of bankruptcy, available in US. But this option has mainly been designed for the businesses.