what is bankruptcy

What is bankruptcy? Bankruptcy is not like monopoly. Instead, it’s a federal law that allows you to get out of debt.

What is bankruptcy? Bankruptcy is a word we all have heard, but many people don’t know exactly what it means. For instance, their only reference point may be “going bankrupt” in the Monopoly game. What is bankruptcy in Monopoly? Bankruptcy in Monopoly means you are out of the game. In short, you are considered bankrupt in Monopoly if you do not have enough assets to pay off a debt.

So is this what bankruptcy means in real life? Yes, at the very least, it’s a simple definition of bankruptcy. But, the great news is real-life bankruptcy means you are not out of the game. That is to say, declaring bankruptcy gives you a new, fresh financial start. It’s like starting the game of Monopoly with more cash and no debt.

What is bankruptcy?

There are three common types of bankruptcy: Chapter 7, Chapter 11 and Chapter 13. Knowing which one to file depends on your income, assets, and type of debts. The different types of bankruptcy are given names based on their chapters within the U.S. Bankruptcy Code. To clarify, this is why bankruptcy is identified with a number.

What is bankruptcy? Chapter 7

Chapter 7 bankruptcy wipes out most unsecured debt. Some common debts that are wiped out in a Chapter 7 are credit cards, medical bills, and deficiencies on repossessed vehicles.  It’s a great way to get out of debt fast and rebuild your credit within one year.

What is Chapter 11 bankruptcy?

Chapter 11 bankruptcy is commonly used by companies and small businesses that want to continue operating and repay creditors through a court-approved plan of reorganization.  Chapter 11 works well for complex financial problems where the business will thrive once its debt is restructured.

What is bankruptcy? Chapter 13

Chapter 13 bankruptcy is a repayment plan on debts that you owe.  It’s a great way to repay tax debt, “cram down” a car, and pay unsecured debt at a monthly budget you can afford.

Is bankruptcy right for you?

There are so many debt relief options that the best thing to do is to call us and schedule a free consultation to find the right solution for you. For instance, it may be bankruptcy or it might be debt settlement, debt consolidation, credit counseling, or a debt management plan.  Regardless, the first appointment with Colorado Debt Help is FREE so get help now!