Bankruptcy: What Are The Different Chapters?

The majority of people in the United States have not had to deal with bankruptcy before

. It is usually a first-time experience for those who are forced to choose it. When someone is forced to consider bankruptcy, it is important that they understand what their options are. People hear various chapters of bankruptcy talked about; although, many do not know their meanings. It is important to know their meanings in order to understand what the choices are.

For individuals, Chapters 7 and 13 are the most fitting. These types deal with consumers individually. Chapter 7 means that creditors will get the transfer of non exempt assets from the debtor in order to get the debt resolved. This should completely take care of the debts that are had. Before making any decisions, it is important to get a competent bankruptcy lawyer.

Chapter 13 is slightly different than that of Chapter 7. It allows individuals to create and propose a 3-5 year payment plan in order to resolve all debts. The plan comes about based on figures pertaining to assets, expenses and debts. Certain debts are exempt from getting wiped free from bankruptcy. Student loans and child support, for instance, will stay with debtors throughout any bankruptcy proceedings.

Chapters 9, 11 and 12 are not for individuals. They all differ from each other as well. Chapter 9 actually has to do with cities or towns that are in need of filing for bankruptcy. This specific chapter was created to deal with the high levels of debt and complex state of assets versus liabilities for a city or town. Of course, they could not be governed by the same laws as for individuals which is why they must be treated differently.

Chapters 11 and 12 are for businesses. Chapter 11 serves the purpose of reorganizing a business instead of shutting it down. It is possible for individuals to try to file for Chapter 11, although given the various ins and outs of the process, it is incredibly difficult to do so which is why it is highly unlikely. Chapter 12 is geared for certain types of businesses; most of whom are vital to a community or have been in existence for generations. This might apply to family fisherman and farmers. The complexities of each of these chapters are indeed overwhelming which is why it is always a good idea to hire a bankruptcy lawyer when faced with this difficult decision.

by: Art Gib

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