Can You Choose the Type Of Bankruptcy You File?

In certain cases, it's possible to choose among several different types of bankruptcy filings. If you are a farmer, for instance, you may consider chapter 12 filing -- this procedure provides numerous debt recovery and creditor mediation options designed specifically for landowners and agriculturists.

If you owe a lot of money to the IRS in back taxes, or if you've recently filed for a Chapter 7 bankruptcy, you might only be eligible to file for Chapter 13. Chapter 7 bankruptcy is far and away the most popular form of filing, since it's in many respects the least complicated and the fastest road to a “clean slate.”

For most individual debtors, the choice comes down to Chapter 7 versus Chapter 13. Chapter 7 bankruptcies typically allow the liquidation and distribution of assets to go forward within a quarter to half of a year -- Chapter 13 filings, on the other hand, can stretch out to three to five years, since chapter 13 debtors may be allowed to pay back unsecured debt to retain privileges and possessions.

If you're a low income individual with few tangible assets other than your personal effects and furniture and the like, Chapter 7 bankruptcy makes a good deal of sense. However, if you owe more than the demarcated limit of $922,975 in secured creditor obligations, you will be forced by law to use Chapter 13. In addition, if you are a property owner, or if you are in a situation in which you have to take on extra debt in the coming months or years to sustain your family, Chapter 13 may be a more palatable alternative.

Under the right repayment and financing plan, Chapter 13 bankruptcy can allow you to keep your house and protect equity and secured properties -- all while dispatching some unsecured debt and creating payment plans for other debts.

Budget conservatively when developing your Chapter 13 plan -- statistics suggest that many, perhaps the majority, of Chapter 13 filers are unable to complete their five-year payment plans and thus have to transition to Chapter 7 bankruptcy down the line.