There are several varieties of bankruptcy available to consumers, businesses, and even government agencies in the United States today. Here, I will discuss the distinct types of bankruptcy, who qualifies, and the general, basic rules for filing each type.
Chapter 7 is the first and most frequent form of bankruptcy. An individual (of any marital status), a married couple, or a business may file a Chapter 7 petition. This case involves the liquidation of your, the debtor's, assets. You will receive assistance from your attorney in completing the bankruptcy petition and schedules. They will require details about you and your spouse, as well as your assets, liabilities, income, and expenses. You can liquidate your assets prior to filing for bankruptcy, or the bankruptcy trustee can liquidate your assets after you register for bankruptcy. Your non-exempt assets would be liquidated by the trustee, and the proceeds would be used to repay your creditors. The order in which creditors are repaid is determined by the type of debt and the trustee.
There are some more specific bankruptcy codes that you would need to discuss with your attorney to determine if you'd be eligible for a Chapter 7 bankruptcy. However, the majority of people/families/businesses who file this chapter of bankruptcy have lost their jobs/businesses due to unforeseen circumstances (medical bills, layoffs, etc.) and then began accumulating credit card debt. In many cases, contacting an attorney is necessitated by the fact that collection agencies are reaching you nonstop in an attempt to collect a debt. If this occurs, it may be time to seek legal counsel regarding your available options.
Chapter 9 will be the next form of bankruptcy I will discuss. A Chapter 9 bankruptcy is unique to the reorganization of municipalities, such as cities, towns, and other government districts (such as utility districts and education districts). Chapter 9 bankruptcy is uncommon because it does not apply to individuals or businesses.
Chapter 11 bankruptcy is the third category. Chapter 11 bankruptcy is another form of reorganization, but it is typically reserved for corporations and partnerships (though individuals may petition under this chapter, it is unlikely to be in their best interests to do so). This is not a liquidation of assets, but rather a plan to repay creditors and debts over an extended period of time. Chapter 11 bankruptcy cases are the most prevalent form of involuntary petition filings, as creditors force a business or corporation into bankruptcy in order to collect loans. Consult your attorney regarding the specifics of a Chapter 11 bankruptcy if you are a business or corporation, as there are often larger companies that specialize in Chapter 11 bankruptcy assistance.
Chapter 12 is exclusively designed for and utilized by family producers and family fishermen. Chapter 12 clients have never been assigned to me in my years of working with bankruptcy attorneys.
Chapter 13 bankruptcy is also prevalent among individuals, couples, and businesses. It is very similar to Chapter 11 in that it involves reorganization and the creation of a plan to repay creditors. The debtor has a maximum of 60 months to repay under Chapter 13 bankruptcy. In a liquidation, a house may be lost/sold to satisfy creditors, whereas in both reorganization chapters of bankruptcy, it is possible to save a home from foreclosure. A Chapter 13 plan requires that a debtor's monthly income exceed the monthly plan payment to creditors. The priority of repayment is determined by your counsel, and the Chapter 13 trustee will execute the plan, which includes collecting the monthly payment and distributing it to creditors. A Chapter 13 plan is frequently viewed as a forced budget for families or individuals who have trouble sticking to a budget on their own.
Chapter 15 bankruptcy is the ultimate type. Chapter 15 bankruptcy was added to the bankruptcy code in 2005, making it the most recent type of bankruptcy. Chapter 15 is also uncommon; in all my years as a bankruptcy attorney, I have never been assigned a Chapter 15 case. The Chapter 15 bankruptcy is categorized as """"ancillary"""" and is frequently referred to as the International or Cross-border bankruptcy. It is for clients who have assets, debts, or who may reside in multiple countries, and who have filed in another country, followed by a chapter 7, 11, or 13 filing in the United States. Consult an attorney if you believe you may qualify for Chapter 15 bankruptcy.
All of the information presented here is fundamental. If you are considering bankruptcy, it is recommended to consult with an attorney due to the complexity of the US Bankruptcy Code. Always be forthright and honest with your attorney regarding your assets and liabilities. You are liable for any incorrect information you provide.""
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