Chapter 7 bankruptcy is a kind of liquidation bankruptcy where many of an individual’s or business’s assets are sold to repay a debt. Chapter 7 bankruptcy tends to be for individual consumers, and in some cases, their spouse or domestic partner, with limited income, but some businesses qualify for this as well.
Chapter 11 bankruptcy is usually only for businesses and corporations. Chapter 11 bankruptcy is a reorganization of a debtors business affairs, debts, and assets. Businesses tend to file for Chapter 11 bankruptcy if they need time to restructure their debts while also getting a fresh start of sorts. While all bankruptcy laws and processes are complicated, Chapter 11 is often looked at as one of the more complicated kinds of bankruptcy.
Chapter 13 bankruptcy is a way for consumers and businesses to restructure debts and come up with a three to five year payment plan that realistically will allow the debtor to pay off debts, while still retaining ownership of their assets. The payment plan needs to be approved by the courts and while a creditor has a right to appeal a court’s decision, they are not a part of the payment plan decision making. If the debtor keeps up with their payment plan, they may be able to get their remaining debts discharged.
The answer to this question is dependent upon the kind of bankruptcy you file for, the state you file for it in, and your particular situation. Individuals that file for Chapter 13 bankruptcy tend to do this in the interest of holding on to assets. Individuals that file for Chapter 7 bankruptcy do so knowing that they will lose most of their assets through liquidation but in many states, an individual is allowed to retain ownership of some non-exempt assets such as, their primary home and automobile.
There is no one blanket answer for everyone to this question but the kind and amount of debt you have, as well as your ability to pay it off, largely determine whether a person needs to file for bankruptcy. If your debts are significantly more than your income and what your assets are worth, bankruptcy may be your most viable option. It is a good idea to discuss your bankruptcy options with a bankruptcy attorney that is licensed to practice and give legal advice to people in the state that you live in.
Whether or not you will be able to keep your credit cards if you file for bankruptcy is ultimately up to the individual credit card companies you have accounts with. If you have a balance on a card that you are trying to get rid of through filing for bankruptcy, that company will most likely cancel your account. Even if you have zero balance on a card, that company has a right to, and may go ahead and cancel your account with them.