Different Types of Bankruptcy
People often hear of Chapter 11 bankruptcy in the news, but know little about other types of bankruptcy. Bankruptcy offers federal protection from certain creditors, but knowing which one is right for your situation may take a bit of homework. The six types of federal bankruptcy are:
- Chapter 7 – Businesses and individuals can file for Chapter 7, which is also known as liquidation. A person or business entity’s non-exempt assets and property are sold to pay creditors during Chapter 7. Dischargeable debts are eliminated in the process.
- Chapter 9 – This type of bankruptcy is little known to the general public because it only applies to municipalities. Under Chapter 9 bankruptcy, cities, towns, villages, counties, taxing districts, municipal utilities and school districts can reorganize their debts.
- Chapter 11 – Businesses, large and small, can file for Chapter 11 as well as individuals with debts that exceed the maximum set aside by Chapter 13. Chapter 11 is another reorganization plan which keeps businesses alive and allows restructuring of debts and liens.
- Chapter 12 – Designed for family farmers or family fishermen, Chapter 12 allows the financially distressed to carry out a plan to repay all or part of their debts. Chapter 12 is more streamlined than other bankruptcy varieties, as well as less complicated and less expensive.
- Chapter 13 – Individuals are allowed to file for Chapter 13. This type of bankruptcy consolidates debts into one monthly payment, made to a court-appointed trustee. Your creditors are paid off in a three- to five-year period.
- Chapter 15 – The newest chapter added to the bankruptcy code, Chapter 15, deals with insolvency cases involving debtors, assets, claimants and other parties of interest involving more than one country.
Once you have gained a bit of information of about bankruptcy, talk to an Irvine bankruptcy attorney to find out more. Most likely, as an individual, you will file for Chapter 7 or Chapter 13, depending on your income, assets and exemptions.
Individuals and businesses deserve a fresh start. Contact a law firm of bankruptcy attorneys in Irvine to find out if bankruptcy is right for you.