There are many bankruptcy filings each year, literally counting into the millions in some years. For our part, we seek to educate those who are looking for information regarding the types of bankruptcy. Chapter 12 bankruptcy is a little known bankruptcy used by family fisherman and family farmers.
It is not common simply because there are not many of these folks left. So if you were to ask one of the many bankruptcy lawyers in the state of Texas about a Ch. 12, they would likely assume it was a mistake that you were asking about this rare bankruptcy. There are some advantages over other types of bankruptcy but because it will likely not apply to your financial situation, we shall more particularly pay attention to chapters 7 and 13.
Another common bankruptcy for business, but also less common for consumers due to its specificity, is a chapter 11 bankruptcy. Reserved typically only for high net worth consumers like a major business figure needing to reorganize her or his financial personal life, this bankruptcy becomes a requirement if there is a situation of assets which necessitate a more drastic measure to reorganize their financial affairs.
This bankruptcy allows for a longer repayment period than is allowed in a chapter 13 bankruptcy; however, it also comes with very cumbersome financial disclosure requirements which must be met continually!
And next to last, we arrive at the bankruptcies that are more common for consumers. One is a chapter 7, also known as a liquidation or straight bankruptcy. This type of bankruptcy is very useful if you are not behind on a mortgage or an auto loan. It is helpful specifically as allowed by those who are under the median income allowed to file a chapter 7.
Those who earn over the median are restricted typically to a chapter 13 bankruptcy as this allows for those who are over the median to repay a portion of their debts as they are allowed according to income.
Finally, you arrive at chapter 13 bankruptcy which allows a person to catch up mortgage payments over 3, 4, or 5 years depending on qualifications and needs. It also allows for a cram-down on a vehicle loan if the owner of the vehicle has had the auto loan for a period of 2.5 years or longer.