What are the different types of bankruptcy?
In North Carolina, creditors’ rights law covers the various types of bankruptcy that a debtor can file for. Bankruptcy is a legal process through which individuals, married couples, or businesses can get relief from debt. There are several different types of bankruptcy, each of which provide different types of relief. The most common type of bankruptcy is Chapter 7, often referred to as straight bankruptcy. Through this type of bankruptcy, most of the debtor’s assets are sold off to pay off as much of their debt as possible. After the debtor’s assets are liquidated, the rest of their debt is discharged. Another type of bankruptcy is Chapter 13, often referred to as a wage earner’s plan. This type of bankruptcy allows debtors to keep some of their assets such as their home or car, while also allowing them to pay off some of their debt through a structured repayment plan. The third type of bankruptcy is Chapter 11, often referred to as a reorganization bankruptcy. This type of bankruptcy is commonly used by businesses to help them restructure their debt and get back on their feet. Finally, there is also Chapter 12 bankruptcy, which is specifically for farming and fishing businesses. This type of bankruptcy is similar to Chapter 13, but offers more lenient repayment terms for farmers and fishers. No matter which type of bankruptcy a debtor decides to file for, it’s important that they understand the terms and conditions and know how their creditors will be impacted. This is where North Carolina’s creditors’ rights law comes in to protect them.
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