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Bankruptcy Chapter 7, 9, 11, 13 and 15

Bankruptcy is a legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor (most common) or on behalf of creditors (less common). All of the debtor's assets are measured and evaluated, whereupon the assets are used to repay a portion of outstanding debt. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations incurred prior to filing for bankruptcy. Bankruptcy offers an individual or business a chance to start fresh by forgiving debts that simply can't be paid while offering creditors a chance to obtain some measure of repayment based on what assets are available. In theory, the ability to file for bankruptcy can benefit an overall economy by giving persons and businesses another chance and providing creditors with a measure of debt repayment.

Bankruptcy filings in the United States can fall under one of several chapters of the Bankruptcy Code, such as Chapter 7 (which involves liquidation of assets), Chapter 11 (company or individual "reorganizations") and Chapter 13 (debt repayment with lowered debt covenants or payment plans). Bankruptcy filing specifications vary widely among different countries, leading to higher and lower filing rates depending on how easily a person or company can complete the process For more information contact us

Chapter 7 bankruptcy is a process of liquidation of personal or business assets because the person or business cannot pay debts. Under Chapter 7, a trustee is appointed to oversee the sale of all business assets, which are distributed to creditors. The process begins with a petition from the debtor. The petition includes financial statements and lists all creditors and the amounts of their claims. A trustee is appointed by the court. There are several meetings with the creditors to discuss their claims and attempt to work out agreement on the amounts each will receive. The trustee then liquidates all the business property and allocates the money to the creditors according to the priority debt claims determined by bankruptcy laws.

Under Chapter 11 Business Bankruptcy is a legal process by which a business may declare bankruptcy but continue to operate under the direction of a court-appointed trustee. This process is called "reorganization," because the trustee reorganizes the business to be more efficient and to be able to pay the creditors of the business. The bankruptcy court may also exempt the business from paying all or part of its debts. Chapter 11 bankruptcy is usually sought and granted in the case where the value of the business is greater than the sum of its assets; in other words, the business has a significant amount of goodwill as a "going concern" which would be lost if the business were sold or liquidated. In many cases, a business may re-emerge from Chapter 11 and continue to operate normally. In other cases, the reorganized business can be sold after some period of time. Chapter 13 Bankruptcy is an individual debt adjustment type of bankruptcy which is available to individuals who have a regular income and "as long as the individual's unsecured debts are less than $336,900 and secured debts are less than $1,010,650". In the case of married individuals, one or both spouses may file the petition. Chapter 13 bankruptcy is available to self-employed individuals and those with unincorporated businesses. Partnerships and corporations are not eligible to file Chapter 13 bankruptcy, although they may file Chapter 7 Liquidation or Chapter 11 Reorganization. Under Chapter 13 bankruptcy, the debtor files a plan to repay all or part of his/her debts, over a three to five year period. The length of time is determined by the monthly income of the debtor. During this time, creditors may not start or continue collection efforts against the debtor.

There are six types of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code.

Basic liquidation for individuals and businesses; also known as straight bankruptcy; it is the simplest and quickest form of bankruptcy available. Municipal bankruptcy; a federal mechanism for the resolution of municipal debts.

Rehabilitation or reorganization, used primarily by business debtors, but sometimes by individuals with substantial debts and assets; known as corporate bankruptcy, it is a form of corporate financial reorganization which typically allows companies to continue to function while they follow debt repayment plans.

Rehabilitation for family farmers and fishermen.

Rehabilitation with a payment plan for individuals with a regular source of income; enables individuals with regular income to develop a plan to repay all or part of their debts; also known as Wage Earner Bankruptcy.

Ancillary and other international cases; provides a mechanism for dealing with bankruptcy debtors and helps foreign debtors to clear debts.

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