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Bankruptcy is lifesaving (lemmy.ml)

submitted 10 months ago by [email protected] to c/[email protected]

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[–] [email protected] 10 points 10 months ago* (last edited 10 months ago) (14 children)

Most individuals still have to work out a debt repayment plan. I know some credit cards and loans still have to be repayed even in bankruptcy. Chapter 11 bankruptcy is only available if you're a corporation or a kajillionaire.

[–] [email protected] 24 points 10 months ago (11 children)

This is just not true.

[–] [email protected] 4 points 10 months ago (6 children)

Which part is untrue? Didn't they change the rules of bankruptcy like a decade ago or something?

It used to be that you could get all your loans discharged and in essence just end up with a really bad credit score. I thought they changed it so people still had to pay their debts off even if they declared bankruptcy.

Unsure if it applied to corporations though.

[–] [email protected] 14 points 10 months ago (2 children)

That’s chapter 7. There are some debts that cannot be wiped out via bankruptcy. That’s true for corporations too. And when it happens, they get liquidated.

You can’t really liquidate a person and cease it to be an ongoing concern. The dynamics are different.

Chapter 11 can and does get filed by people - but it’s a reorganization, and buys you time to negotiate with the debt holders if able for a reduced amount or a longer repayment plan or reduced interest instead of going through chapter 7 where they’ll get nothing or very little if it’s unsecured debt.

Both will tank your credit.

[–] [email protected] 10 points 10 months ago (1 children)

Maybe you can't liquidate a person.

[–] [email protected] 3 points 10 months ago

Soylent is people.

[–] [email protected] 2 points 10 months ago (1 children)

I've been through it and the attorneys involved stated up front, no individual can apply for "Chapter 11" bankruptcy, and then they proceeded to give me the current literature about state law. Maybe it's differerent from state to state, but where I live individuals are not allowed to file for Chapter 11 bankruptcy.

Everyone I've talked to that went through what I did was required to file for Chapter 7 bankruptcy instead. And yes it did tank my credit, until I paid off the bankruptcy and had it discharged. Then suddenly I was getting notices about "preapproval for credit" once again (which I totally disregard, I'm not going through all that again!).

[–] [email protected] 1 points 10 months ago (1 children)

It does not vary by state. Usually 7 or 13 are better/faster for individuals - but there's no reason you can't.