What Are the Different Types of Bankruptcy Cases?
"The 1978 Bankruptcy Code is the name of the current bankruptcy statute. The Code was amended in 2005; however, the 2005 amendments do not apply to cases filed prior to or pending on the effective date of the amendments, October 17, 2005. The Code is supplemented by the Federal Rules of Bankruptcy Procedure and local rules governing the procedures used by bankruptcy courts.The Code is contained in Title 11 of the United States Code. There are nine chapters total: 1, 3, 5, 7, 9, 11, 12, 13, and 15. Chapters 1, 3, and 5 are concerned with general applicability. Each of Chapters 7, 9, 11, 12, 13, and 15 addresses a distinct type of bankruptcy proceeding. The Code refers to the financially distressed individual or organization as the ""debtor.""There are numerous reasons why debtors file for bankruptcy, including divorce, job loss, and health issues. In accordance with various stay provisions, debtors are entitled to a pause in collection efforts upon filing. By declaring bankruptcy, debtors may be able to obtain a discharge of personal liability for a number of debts and restructure others.There are two fundamental categories of bankruptcy: liquidations and reorganizations. In chapter 7 liquidations, the non-exempt assets of the debtor are sold for the benefit of the creditors. In exchange for surrendering these assets, the debtor typically receives a discharge from personal liability for pre-bankruptcy debts and is permitted to retain assets acquired after the petition.The chapters 11, 12, and 13 deal with a variety of reorganizations and payment arrangements. In reorganization proceedings, the debtor's assets are not sold. Individual debtors frequently file chapter 13 to save their residences. Reorganization bankruptcies enable a debtor to restructure his debt and repay it in full or in part through a repayment plan funded by his income. The court must approve the proposal before it can be imposed on creditors.
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"What Are the Different Types of Bankruptcy Cases?"
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and updated on 03 June 2023