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Chapters Of The Bankruptcy Code, What Are The Different Types?

The common chapters of the Bankruptcy Code are:

CHAPTER 7 - Chapter 7 refers to a "liquidation" bankruptcy and can be used by an individual to obtain a discharge of many debts without making payments in the future. It may also be used by a business that wishes to liquidate its business assets under the protection of the bankruptcy court.

A trustee is appointed to take control of certain asserts of the debtor and to sell or distribute these assets for the benefit of creditors. A trustee can also recover certain assets that have already been distributed and bring those assets back into the bankruptcy estate.

Creditors generally have the right to file "claims" which identify the amount of money owed and the documents supporting the claim. In some situations may be able to file a written request (motion) to the court for an order allowing the creditor to take back a residence, automobile, or other property.

CHAPTER 11 - Chapter 11 is often called the "reorganization chapter," and it allows a corporation, partnership, or individual to reorganize property and debts without liquidating all assets. The basic goal is for a debtor to retain control of property and present a "Plan of Reorganization" for repaying creditors. If the creditors accept the Plan of Reorganization, and the court approves the plan, a debtor is able to reorganize personal, financial, or business affairs.

A trustee may be appointed if a motion is filed with the court and the court agrees that a trustee is needed to manage the affairs of the debtor.

Creditors have the right to file "claims" which identify the amount of money owed and the documents supporting the claim. The can also object to a debtor's plan proposal, and in some situations file a written request (motion) for an order allowing the creditor to take back a residence, automobile, or other property.

CHAPTER 13 -- Chapter 13 refers to reorganization of debts by an individual who has regular income and debts that are below certain statutory limits. A Chapter 13 debtor proposes a "Chapter 13 Plan" which proposes a repayment schedule. The plan essential identifies details for the debtor to retain control of property, keeping up with current debts, and repay at least some of the past due debts.

A trustee is appointed to monitor activity in the case and report to the court on whether or not the debtor is meeting obligations. If a debtor is not meeting obligations, the trustee or a creditor can ask the court to dismiss the bankruptcy case. If a debtor's income rises, the trustee or a creditor can ask the court to increase the amounts paid to creditors.

Creditors have the right to file "claims" which identify the amount of money owed and the documents supporting the claim. The can also object to a debtor's plan proposal, and in some situations file a written request (motion) for an order allowing the creditor to take back a residence, automobile, or other property.

Basics of bankruptcy law.

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Before Filing Bankruptcy