Americans have a very strong reaction to the word bankruptcy. Historically, we associate it with failure or an unwillingness to pay the debts one has incurred. But in recent years, the stigma against bankruptcy has faded as Americans have come to realize what bankruptcy actually is. It is a perfectly legal and valid means for people facing financial difficulty – often through no fault of their own – to get a fresh start. For more information on Bankruptcy cases in Utah, a free initial consultation is your next best step. Get the information and legal answers you are seeking.
Common Types of Utah Bankruptcy
Not all bankruptcies are equal. In fact, bankruptcy lawyers in Salt Lake City and across the country deal with several different types of bankruptcies every day. There are benefits and drawbacks to each type, and you probably do not qualify for every form of bankruptcy. Two of the most common types of bankruptcies to consider are Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
A Chapter 7 Bankruptcy, or a liquidation bankruptcy, allows an individual or business to eliminate debts by having certain property liquidated by a trustee. The profits from this liquidation are used to repay creditors. However, most types of personal property can be declared exempt from Chapter 7 liquidation, and you often do not need to repay your debts completely in order to have them expunged.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcies are often called reorganization bankruptcies. Instead of selling your property to repay your creditors, you file a court-approved repayment plan that explains how you will pay off your debts in a more traditional fashion. Again, you might not need to repay the complete amounts you owe, and if you manage to complete your plan, all of your dischargeable debts are eliminated once the process is complete.