Those who are burdened by excessive financial burdens can, thankfully, find relief from the U.S. government. Debtors shall be given the opportunity to discharge their debts without fear of debt collector persecution or legal action. The bankruptcy laws may prevent the loss of a debtor's property.
However, filing for bankruptcy will not prevent a person from being prosecuted for a felony or halt tax claims. Financial obligations such as student loans and child support are typically exempt from discharge in bankruptcy.
There are five varieties of bankruptcy, with Chapter 7 and Chapter 13 being the most prevalent. Listed below are five distinct categories of bankruptcy:
Chapter 7 Liquidation
This bankruptcy is the simplest to comprehend. Partners in business, married couples, or individuals may petition for a Chapter 7 proceeding. It involves an interview with a Credit Counseling Agency. One of the requirements is that the individual filing must appear in court. Typically, the process takes about three months to complete. The court will grant a discharge from unsecured debts upon completion. Then, a trustee will be appointed to determine which assets are exempt from liquidation. All non-exempt assets must be used to pay off the debts. No one discharged from a Chapter 7 bankruptcy will be permitted to file a subsequent Chapter 7 petition within eight years.
Municipal Chapter 9 bankruptcy
This category of bankruptcy primarily involves municipalities. According to the bankruptcy code, a municipality is a """"political subdivision, public agency, or instrumentality of the State"""". As it involves municipalities, this case could be quite complex.
Plan of Reorganization for Chapter 11
Typically, business corporations file for this form of bankruptcy. Normally, a court-appointed trustee would oversee a bankruptcy, but in a Chapter 11 proceeding, the corporation will organize its own reorganization plans. It will consist of a variety of repayment strategies, including debt consolidation measures undertaken in collaboration with creditors.
Chapter 12 Family Farmer or Family Fisherman Personal Bankruptcy
This form of bankruptcy proceeding is restricted to fishermen and farmers with a steady annual income. The farmers' and fishermen's ability to repay their debts will depend on their future revenues, while their properties will not be used to satisfy their creditors.
Chapter 13: Payment schedule for Wage Earners
Only individuals with fixed incomes are eligible to file for this form of bankruptcy, which allows borrowers to save their assets. The debtor will repay the financial obligations by allocating a portion of his or her income to the creditors.""
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