7/28/2019 Bankruptcy Chapters
1/2
Bankruptcy chapters-Icy-spun-03/04
Bankruptcy Chapters Simplified
Different bankruptcy chapters apply to different types of
petitioners or filers. The Bankruptcy
Code cites which can be applied to different scenarios involving
bankruptcy filing.
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
mandates that all debtors
must undergo credit counseling. If you happen to be one, you
must get either a pre-bankruptcy
before bankruptcy can be filed or pre-discharge bankruptcy
education before discharging debts.
Always pick a counseling agency that is duly approved and
recognized by the United States
Trustee's office.
Effects of Individual And Corporate Bankruptcy
Chapter 7, also known as the liquidation or straight bankruptcy,
is an available remedy for an
individual, partnership, or other business unit. It is one of
the court-assisted bankruptcy
chapters. You can file bankruptcy under Chapter 7, no matter how
much you owe or whether
you are solvent or insolvent.
There are no repayment plans that are allowed to be filed under
this bankruptcy chapter. It
works through the appointment of a bankruptcy trustee who
determines what legally available
asset or property you have that can be sold and uses the profits
to pay off creditors. You may
be able to keep some properties that are exempt from court
seizure.
Why You Should Choose Reorganization Bankruptcy?
Distressed partnerships, corporations, businesses, or
individuals can file bankruptcy under
Chapter 11 to allow them to come up with a reorganization plan
focused on paying off their
creditors. If Chapter 11 applies to you, you need to file
written disclosure statements in
addition to a reorganization plan. You are given 120 days or, if
extended by the court, 18
months to file the plans. Otherwise, your creditors will be
allowed to submit their own.
The law treats small business cases in a different way from an
ordinary bankruptcy case. They
end more quickly than other Chapter 11 cases and other
bankruptcy chapters since filing
deadlines are tighter and filing extensions are rarely granted.
A small business debtor case is
determined by applying the dual-part test:
Debtor is engaged in actual business activities and holds a
total debt of not more than$2,343,300; and
Debtors case has no creditors committee appointed by the U.S.
Trustee or, if one isappointed, such committee is inadequately
active to give proper supervision of the
debtor
7/28/2019 Bankruptcy Chapters
2/2
The U.S Trustee plays an active role in overseeing the
activities of the small business debtor. If
you fall under this category, the Trustee shall interview you,
ask about the business plans,
evaluate your businesss viability, and explain your
responsibility of filing reports or other
documents required by the court.
The Family Farmers Or Fishermen Bankruptcy Requisite
Do you belong to family farmers or family fishermen with regular
income? Chapter 12 is the
most appropriate out of all the bankruptcy chapters for you. You
can still control and own your
properties even if you voluntarily filed for bankruptcy under
Chapter 12. The indispensable
requirement of regular income is to ensure that your annual
income is amply stable and regular
to allow the timely payments under your three- or five-year
repayment plans.
When Is Wage Earners Bankruptcy Appropriate?
Only self-employed or individuals managing an unincorporated
business can file bankruptcyunder Chapter 13. Your debts must be
lower than the amount set by law. Your corporation or
your partnership cannot obtain relief under this chapter.
These bankruptcy chapters are intended to give everyone a chance
to meet their debts first and
return to the state of financial stability. Declaration of
bankruptcy is only a course of last resort
to protect both creditors and debtors and obtain that coveted
fresh start.
Summary: Bankruptcy chapters may be a bit confusing when read in
its original text. We can
help you clarify the highlights of the legal text through this
comprehensive summary.
KP: Bankruptcy chapters
