7th Chapter
The most prevalent of the six varieties, Chapter 7 bankruptcy governs the liquidation procedure. Liquidation is the process by which the assets of a company or individual are redistributed or dissolved; it can be voluntary or involuntary. A trustee is appointed when a business applies for Chapter 7 bankruptcy to oversee the liquidation process. The trustee determines which of the company's debts are legally enforceable and which creditors must be paid, as opposed to relationships that will be dissolved.
When an individual files for Chapter 7 bankruptcy, he or she is permitted to retain certain exempt property. Certain categories of debt, including home mortgages, child support, and student loans, do not qualify as exemptions.
9th Chapter
Chapter 9 bankruptcy is only available to municipalities. In the past, if a municipality was unable to pay its obligations, certain actions were taken, such as increasing taxes. During the Great Depression, when raising taxes did little to enhance a municipality's financial situation, Chapter 9 bankruptcy was created. A municipality must seek state sanction before filing Chapter 9 bankruptcy in some locations. Jefferson County, Alabama, and Orange County, California, were the most infamous Chapter 9 cases.
11 Chapter
This form of bankruptcy is available to both corporations and individuals, but corporations use it more frequently. Chapter 11 differs from Chapter 7 in that the debtor retains substantial control over the assets. Instead of having a fiduciary in charge, the debtor retains control under court supervision. Chapter 11 focuses primarily on the reorganization of a business. With the restructuring measures, ownership of portions of the business and revenue rights can be transferred from the debtors to the creditors.
12 Chapter
Similar to Chapter 13, which will be discussed below, only farmers and fishermen are eligible for Chapter 12 bankruptcy. Initially, there were no provisions made for these agricultural professionals. Until 2005, when a permanent chapter was enacted, numerous addenda and amendments were included, each of which expired and was subsequently renewed.
Chapter 13
In contrast to Chapter 7, which liquidates assets and provides immediate debt relief, Chapter 13 is more of a debt rehabilitation proceeding. Similar to Chapter 11 in that it involves the reorganization and restructuring of assets. The debtor devises a plan to repay all creditors within three to five years. Because Chapter 13 requires a certain amount of disposable income to fund the bankruptcy plan, it may not be suitable for everyone.
Kapitel 15
This form of bankruptcy involves assets that are dispersed across multiple countries. The provisions enumerated in Chapter 15 of the Bankruptcy Code assist in mitigating problems caused by international litigation. In these instances, U.S. courts have discretion over whether to provide additional assistance to a party involved in a foreign law proceeding.""
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