This seems to be a major concern for many people. The truth is that if you are having trouble paying your bills, you qualify to file for relief under the Bankruptcy act.
There are several kinds of bankruptcies. Most people can recall the airlines filing chapter 11 bankruptcies and lately many financial institutions have filed chapter 7 bankruptcies. However, for individuals, a chapter 13 or chapter 7 bankruptcy is usually the best was to seek relief from debts. Chapter 11 is generally used by businesses to reorganize their debts. But it too can be used by individuals, predominantly when they don’t meet the criteria of a chapter 13.
Anyone, business or not, can file for chapter 7 relief. The only limitation is that a consumer can file only if their income does not greatly exceed their expenses (and there are limitations on the kind and amount of expenses one can claim).
If there is excess income, generally a consumer can file a Chapter 13 bankruptcy. Here, too, however, there are limits. If your unsecured debts exceed $336,900 or your secured debts exceed $1,010,650 then you can’t file this kind of bankruptcy. But if you don’t qualify for a chapter 13 and don’t want to or can’t file a chapter 7, you can always file a chapter 11 bankruptcy.
The decision to file bankruptcy and what type would be best for you is not a casual problem. It is always best to consult competent bankruptcy counsel to discuss these issues. Just remember that there is almost always a way to get relief from your debts if needed.
