News reports show that even big businesses have gone broke around the world with the disastrous impact of the recession. It’s surprising therefore that even those who are filing for bankruptcy is sometimes not fully aware of the types of bankruptcy.

Thinking of bankruptcy lightly imagining it to be the easier solution is not a smart thing to do. You should know that there are different ways to stop yourself from as many would call it ‘going broke’. Bankruptcy should be resorted only in desperate situations. However if you are convinced that you are bankrupt you should learn about the types of bankruptcy to know what would apply in your particular case.

If you are not aware even about the very basics it would help you to know that there are 2 main types of bankruptcy namely, chapter 7 and chapter 13 bankruptcy. Chapter 7 bankruptcy relates to a case where it’s fairly straight forward. It’s generally referred to as ‘straight bankruptcy’. If you happen to own very little property and has a lot of unsecured debt then this applies to you.

Chapter 13 is the other main component when considering the types of bankruptcy. This is quite different from chapter 7. You would have to pay all or a considerable amount of your debt through your income and the time period could be anything between 3 – 5 years. Your secured debt should be less that $750000 and unsecured debt should also be less than $250000.

Most of your debt will be cancelled if you fall under chapter 7 among the types of bankruptcy. However keep in mind that any debt in the form of federal tax bills or child support will have to be paid. It would be mentioned in your credit history in the case of both chapter 7 and 13 bankruptcy and that is why it’s only advisable to file for bankruptcy if the situation appear to be hopeless.

Chapters 9, 11 and 12 are the some of the other lesser known items in types of bankruptcies. Those categorized as family farmers fall under chapter 12 while chapter 9 pertains to municipalities and governmental units. Chapter 11 on the other hand is relavent to those individuals with fair incomes and assets.

The sensitive matter of bankruptcy is one which should not be handled by one with little understanding of types of bankruptcy as choosing the relevant chapter among types of bankruptcy is a vital task that depends on your particular situation.

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