Filing for bankruptcy can be a powerful tool for regaining financial control when debt becomes overwhelming. Whether you’re an individual struggling with credit card bills or a business trying to restructure, U.S. bankruptcy law offers several legal pathways for relief—most commonly under Chapter 7, Chapter 11, or Chapter 13 of the Bankruptcy Code.
At Lforlaw.com, we help individuals, families, and business owners connect with experienced bankruptcy attorneys who understand the complexities of the law and can guide you through every step of the filing process. Bankruptcy is not the end—it’s a legal reset that can lead to a new beginning.
Understanding the Basics of Bankruptcy
Bankruptcy is a legal process that allows individuals and businesses to eliminate or restructure debts under the protection of the federal court system. It can stop collection actions, prevent foreclosure, and provide a clear path to financial recovery.
The three most common bankruptcy filings are:
- Chapter 7: Liquidation for individuals and businesses
- Chapter 11: Reorganization primarily for businesses, but also available to high-debt individuals
- Chapter 13: Repayment plan for individuals with regular income
Each chapter has specific eligibility requirements, benefits, and consequences, so choosing the right one is essential.
Chapter 7 Bankruptcy – Liquidation
Chapter 7 is the most common form of bankruptcy filed by individuals.
Key Features:
- You may eliminate most unsecured debts (credit cards, medical bills, personal loans).
- You must pass a means test to qualify, based on income and household size.
- Non-exempt assets may be sold to repay creditors, but many filers keep most or all of their property through state and federal exemptions.
Pros:
- Quick process (usually 3–6 months)
- Stops creditor lawsuits, wage garnishment, and collection calls
- Offers a clean financial slate
Cons:
- Stays on your credit report for up to 10 years
- Does not discharge student loans, child support, or certain tax debts
- You may lose non-exempt property
Chapter 7 is ideal for individuals with little income and no realistic way to repay debts.
Chapter 13 Bankruptcy – Wage Earner’s Plan
Chapter 13 is designed for individuals who have a steady income and want to reorganize their debt instead of wiping it out entirely.
Key Features:
- You propose a 3- to 5-year repayment plan based on your disposable income.
- You can catch up on missed mortgage or car payments and keep your assets.
- Certain debts (like taxes or back child support) must be paid in full during the plan.
Pros:
- Allows you to keep your property
- Stops foreclosure and repossession
- Consolidates debts into manageable monthly payments
Cons:
- Requires discipline and steady income
- Missed plan payments can result in dismissal
- Legal fees may be higher due to the complexity
Chapter 13 is often used by homeowners trying to avoid foreclosure or individuals who fail the Chapter 7 means test.
Chapter 11 Bankruptcy – Business Reorganization
Chapter 11 is primarily used by businesses—including corporations, partnerships, and LLCs—but can also be used by individuals with high levels of debt.
Key Features:
- Allows continued business operation while debts are restructured
- The debtor proposes a reorganization plan to repay creditors over time
- Creditors vote on the plan and the court must approve it
Pros:
- Avoids liquidation and allows businesses to stay open
- Offers flexibility in restructuring secured and unsecured debt
- May involve asset sales or renegotiation of leases and contracts
Cons:
- Highly complex and expensive
- May take several months to years to complete
- Increased court oversight and administrative requirements
Chapter 11 is typically reserved for businesses seeking to survive financial distress without shutting down operations.
What Filing Bankruptcy Can Do
- Stop wage garnishment and lawsuits
- Halt foreclosure or eviction proceedings
- Freeze bank account levies
- Discharge qualifying debts
- Eliminate unsecured obligations
- Provide breathing room to negotiate with creditors
Filing also triggers an automatic stay, a legal shield that immediately stops most collection efforts.
What Bankruptcy Can’t Do
- Eliminate student loans (with rare exceptions)
- Discharge recent tax debts
- Cancel child support or alimony obligations
- Wipe out debts from fraud or willful misconduct
An attorney can help evaluate which of your debts are dischargeable and how to best protect your assets.
How Lforlaw.com Helps You File Smart
The bankruptcy process involves detailed forms, court deadlines, credit counseling, and strict documentation requirements. Errors or omissions can delay your case or cause dismissal. At Lforlaw.com, we connect you with trusted attorneys who can:
- Analyze your financial situation
- Recommend the right chapter to file under
- Prepare and file all legal documents
- Represent you at hearings
- Help rebuild your financial future
Ready for a Financial Reset?
Bankruptcy is not a failure—it’s a legal tool for recovery. Whether you’re facing overwhelming personal debt or trying to save your business, we’re here to help you make informed, strategic decisions.
For personalized legal guidance and support with Chapter 7, 11, or 13 bankruptcy filings, contact us today.
