Bankruptcy Definition

State laws play a major role in bankruptcy cases.

Single monthly payment Transparent Rates Better Terms Faster Funding

What is Bankruptcy?

It is a legal term to define the state of a person or business in which they are not able to repay their outstanding debts. In this process, various entities, usually the ones who cannot pay back their debts, file a petition in the court, demanding relief from their debts.

State laws play a major role in bankruptcy cases. There may be many prominent differences in the bankruptcy cases' outcomes, as every state has its own laws and treat cases very differently.

Types of Bankruptcy

There are many types of bankruptcy under the US Bankruptcy Code. The below three are its major types that deal with individuals and businesses:

1. Chapter 7

This chapter is also called straight or simple bankruptcy and it lets the debtors dispose of or eliminate almost every debt such as student loans, criminal fees, child support, personal loans, payday loans, medical bills, etc.

2. Chapter 12

In this chapter, the 'family farmers' or 'family fishermen' with regular income are provided relief from their ongoing debts. Under this, the debtors can propose their creditors about an installment repayment plan that is spread over three to five years.

3. Chapter 13

In this, the debtors are allowed to retain the ownership of all of their assets, but must give some portion of their future income to repay the creditors. The future time period can be over three to five years.

Trusted Direct Lender • 12+ Years

Discover Simplicity and Speed to Debt-Free with Installment Loans for Debt Consolidation.

Apply for $200 – $1,000 with quick approval from a trusted direct lender.

Reset my Debt