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Understanding Different Types
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Understanding different types of bankruptcy fillings are one of many
essential elements of a successful personal bankruptcy filing. By
learning different bankruptcy situations you will be able to determine
one that suits your financial conditions best.
The Bankruptcy Code has enacted a total of six bankruptcy types, each
one are named and called after chapter numbers and their specific
distinctive qualities. The following are chapters and names or titles of
each of the types of bankruptcy.
Chapter 7, Liquidation, provides for 'liquidation' specifically the
sale of an individual debtor's non-exempt properties and the
distribution of its proceeds to his or her creditors.
Chapter 9: Adjustment of Debts of a Municipality, provides for
reorganization of municipalities including cities and towns, and also
villages, counties, taxing districts, municipal utilities, and school
districts.
Chapter 11, Reorganization, provides for reorganization, usually
involving a corporation or partnership, wherein the debtor usually
proposes a plan of reorganization to keep its business alive and pay his
creditors over time if not to seek relief.
Chapter 12: Adjustment of Debts of a Family Farmer or Fisherman with
Regular Annual Income, provides for adjustment of debts of a 'family
farmer' or a 'family fisherman' as those terms are defined in the
Bankruptcy Code, while allowing a family farmer or fisherman to continue
to operate the business while the payment plan is being carried out.
Chapter 13, Adjustment of Debts of an Individual with Regular Income,
provides for adjustment of debts of an individual with regular income by
allowing the debtor to keep his property and pay his debts over time,
usually three to five years.
Chapter 15, Ancillary and Other Cross-Border Cases, provides necessary
measures dealing with cases of cross-border insolvency. This is the US
adoption of the UN Model Law on Cross-Border Insolvency coordinated with
the other countries' interpretation to promote a uniform and equivalent
legal action for cross-border bankruptcy insolvency.
Among the six types of bankruptcy, the most commonly filed ones are
the personal bankruptcies Chapter 7 and Chapter 13, and also Chapter 11
bankruptcy -- cases filed by individual consumers or business
partnerships or corporations facing financial debts.
Chapter 7 bankruptcies allows a debtor to erase all debts owed while
letting people keep the house and cars if he or she desire. The only
payments that the debtor will have to pay are the payments on the house
and any cars that he or she may have kept.
With chapter 13 bankruptcy a debtor can keep almost everything that he
or she want to. In this case the debtor tells his or her attorney about
all the things he or she wants to keep. The attorney then talks to the
creditors to accept lower overall costs for each item. Depending on the
situation, this can take thirty days or even more.
So, if you are considering a personal bankruptcy consulting an attorney
who is reputable in filing for personal bankruptcy is the best way to
determine the best type of bankruptcy to file for your situation. In
addition, since the bankruptcy process involves a lot of paperwork, a
good bankruptcy lawyer can assist you with this task, and ensure that it
is done correctly.
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