Jl Martin Law Firm - Different Chapters Of Bankruptcy
Real Estate Litigation : The execution is mandated by statute law which is found in the Bankruptcy Code in Chapter 11 of the United States Code
. State law also contributes to minor specifics which are not clarified at the federal level.
There are six types of bankruptcy under type 11. Chapter 7 deals with basic liquidation for businesses and individuals. Chapter 9 is for municipal bankruptcy. Chapter 11 is used for reorganization and rehabilitation, generally by business debtors. Chapter 12 pertains for the rehabilitation of fisherman and farmers.
Chapter 13 is a form of rehabilitation, but it is designed for individuals with a regular source of income and entails a payment plan. Chapter 15 is used for ancillary as well as other international cases.
Chapter 7 and 11 is the most common filing. Most consumers will file under Chapter 7, and almost all businesses use 7 or 11. In Chapter 7, an individual surrenders all of their property which cannot be liquidated. The funds from the liquidation are distributed to the creditors. The debtor is granted to a discharge of some debt, but only if he meets legal stipulations and has not demonstrated inappropriate behavior such as concealing records. Certain debts such as child support or school loans will not be discharged. An individual may file for Chapter 7 once every eight years.
With Chapter 13, the debtor retains all property and assets but it is required to dedicate a percentage of his future income to paying off creditors. The period of repayment and amount of payment will vary as they are determined by factors such as the value of the debtors property and the amount of the debtors income and expenses.
In Chapter 11, the debtor will be a Debtor in Possession DIP as they retain control and ownership of their assets. Bankruptcy Court will work with the debtor and creditors for establishing a plan while the debtor still runs his business. Creditors then vote on the proposed plan. The debtor will be permitted to continue to operate and pay back the debt as specified by the plan.
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