Bankruptcy is a process approved by the High Court that helps organisations or individuals to get out of debt. It essentially provides two basic forms of relief:
As an absolute last resort, this solution offers a second chance or a new lease on life. One of the reasons it should be regarded as a last solution is because it can be quite expensive and can leave a blemish on the credit record of those who file.
For Londi, choosing among the most common types of bankruptcy, means that she knows all available options before making her final decision.
There are four types of bankruptcy, with three of them quite popular.
Similar to Chapter 13 is Chapter 11, often relied upon by small businesses. Business owners don’t have to close shop while debts are being paid off.
Chapter 7 is one of the most common types of bankruptcy and is usually ideal for individuals.
The assets that the individual or corporation has are sold off and the proceeds are used to pay debt off. It is usually quick and may be complete within five months.
For Londi, who is looking for more of a fast solution, this could offer the ideal solution. She knows that she will be debt-free within five months.
Chapter 13 can be completed within a period of three to five years and can be slightly more complex because a debt restructuring plan is devised. One of the benefits of this solution is that assets can be kept.
If Londi is looking for more assistance with restructuring her debt, this may be a better solution. The trustee will monitor everything, making sure that her debt is repaid on time and in full.