Learning about various 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 decide one that best suits your financial situation.
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 the types of bankruptcy.
6 Types of Bankruptcy Fillings
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 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 run 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.
Chapter 7 and 13 – Common Types of Bankruptcy
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 consumers or business partnerships or corporations facing financial debts.
Chapter 7 bankruptcy allows a debtor to erase all debts owed while letting people keep the house and cars if he or she wish. 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 bankruptcy get help from an attorney who is reputable in filing for personal bankruptcy. The lawyer can help you to decide the best type of bankruptcy to file for your situation. In addition, since the bankruptcy process involves much paperwork, a good bankruptcy lawyer can help you with this task, and make sure that it is done correctly.