People often look at bankruptcy as a very negative thing. However, this is not always the case as it is possible for bankruptcy to actually be a good thing. In fact, in certain situations, it can actually benefit the company or the individual to declare bankruptcy. There are some advantages of doing so, which is of course dependent on the situation that the particular individual or company might be in. Understanding the different kinds of bankruptcies can shed some light as to how these can actually benefit the individual and work to his advantage rather than add to the problems.
A popular form of bankruptcy is known as the chapter 7 bankruptcy. This bankruptcy is declared by individuals or by businesses that are determined that there is no recovery and want to shut down the business as a result. All debts are considered to be null or void as a result of this and they are written off the slate. The bankruptcy can be helpful for those companies that are neck deep in debt and not considered to be viable anymore. However, one should not that by declaring this form of bankruptcy, not all debts will be erased. Certain kinds like student loans remain unaffected by this.
The chapter 11 bankruptcy is one of most commonly herd terms of late. Considering the tumultuous economy that we are in today, it is no surprise to see the sheer number of companies shutting down citing the chapter 11 bankruptcy. In fact, this is the only kind of bankruptcy that allows companies to continue trading and functioning whereas the debts incurred by the company are taken over by the bankruptcy court. A company might actually become debt free in a period of months after filing this form of bankruptcy.
There are many other kinds of bankruptcies as well, like Chapter 13, Chapter 12 and Chapter 9. Each of these offers debt relief for different groups of individuals. Hence, depending on the category that your financial situation might be under, you need to file the appropriate kind of bankruptcy. A lawyer will help assist you in this regard and suggest the appropriate kind of bankruptcy to go in for. Remember that you need to satisfy certain conditions before you can simply go ahead and file for bankruptcy. It also goes without saying that declaring bankruptcy can have serious implications on your credit scores and finances. Hence, consult with professionals before you can take the decision on your own.