The world of bankruptcy can be a difficult place to navigate through. There are many different factors involved that will dictate the terms and agreements of a bankruptcy. Different types of bankruptcy are also used for different entities. Some are used for businesses and others are used for individuals. Let’s take a look at the different types of bankruptcy and who can use which one.
Individual Bankruptcy Types
Chapter 7 – This type of bankruptcy is known as the liquidation type for individuals. Individuals who file for chapter 7 are to sell off their assets in order to repay debts. They may even have to sell their house. This is why many people turn to legal counsel to sort these types of instances. Houses are not always needed to be sold which is why it is crucial to figure out the asset selling process as soon as possible for this bankruptcy type.
Chapter 13 – Chapter 13 is used by individuals to settle debts. A repayment plan ranging from 3 to 5 years will be drawn up to pay back debts owed to creditors or other organizations. The terms will be set based on income levels as well as how much overall debt is owed. Individuals can typically keep their home in this bankruptcy type.
Business Bankruptcy Declarations
Chapter 11 – Chapter 11 is usually filed by big businesses but individuals may also file for this bankruptcy type. When a company files for chapter 11 it means that they are going through a restructuring and reorganization of the company’s finances. This is a way for the business to be able to continue operations even though they are in debt. A repayment plan must be approved with a favorable outcome for creditors. This bankruptcy type is typically time consuming and expensive. Businesses may also need the courts permission to make certain financial decisions while in bankruptcy.
Chapter 12 – A chapter 12 bankruptcy is reserved for farmers and fishermen. It serves as a way for them to stay in business while being placed on a repayment plan for their outstanding debts. To learn more about the terms and details of this type of bankruptcy, reach out to a bankruptcy lawyer in your area. The details can be confusing without the help of legal counsel.
Chapter 9 – This type of bankruptcy is filed by municipalities. It may be filed by cities, school districts, towns, or other similarly categorized entities. A plan will be established between the municipalities or other entities and creditors. This serves as a way for the entity to continue on with operations and services while having a repayment plan in place.
Chapter 15 – This is the newest form of bankruptcy and is used in international cases. More specifically, it is used when a company or individual owns assets in more than one country includes the United States.
To restore your financial situation you should contact a qualified bankruptcy lawyer from our friends at The Law Offices of Ronald I. Chorches.