Due to such circumstances, provisions on different bankruptcy proceedings have been made by the United States government to ensure that individuals or organizations can find protection from
potential lawsuits against them. This will prevent the debt collectors from pursuing legal actions to persons who owe them. A person in debt will also get a chance to protect his property from
being taken away.
Declaring bankruptcy, though, is not going to keep an individual from being brought to court for felony or stop any tax claims. Financial obligations just like educational loan and child support
also survive bankruptcy.
There are 5 different types of bankruptcy proceedings: Chapter 7, Chapter 9, Chapter 11, Chapter 12, and Chapter 13. The personal bankruptcy, which are Chapter 7 and Chapter 13, are the most
typical. Listed here are some basic points about them:
Chapter 7 Liquidation
Such type of bankruptcy is the simplest to comprehend. Couples, partners in business, and individuals are permitted to file this type of bankruptcy. A person who files for this type of bankruptcy
must undergo an interview by a Credit Counseling Agency representative. The individual who is filing is also going to appear in the court. Usually, it takes something like 3 months to finish the
entire process. Once the bankruptcy proceedings are completed, the court will declare that the person is discharged from the unsecured financial debts. The properties of a debtor will then be
evaluated for liquidation by a trustee. The assets which are not exempted will either be sold or given to the lenders or creditors. Once the Chapter 7 process is done, a debtor can't file all
over again until eight years have passed by.
Chapter 9 Municipality bankruptcy
Only municipalities could file under this kind of bankruptcy. A municipality is described by the U.S. Bankruptcy Code as any kind of "political subdivision or public agency or instrumentality of
a State". Since it deals with a larger group, the process is perhaps the most intricate among the kinds of bankruptcy cases.
Reorganization of corporation or partnership
Partnerships and corporations commonly apply for bankruptcy case under Chapter 11. Firms are going to be the ones to make their own restructuring proposal since there will be no trustee assigned
in this type of proceeding. It'll involve different types of strategies for repayment, debt consolidation measures to help the business, and mainly, all means that are viable in order to repay
the lenders.
Chapter 12 Adjustment of debts of a family farmers or family fisherman
This type of bankruptcy is exclusively for family fishermen and farmers which have a fix income yearly. In this particular bankruptcy proceeding, a person's properties will neither be seized nor
liquidated; instead, debt payments are going to be generated from the forthcoming income.
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- San Antonio Bankruptcy
Chapter 13 Wage earner's payment plan
Only individuals who have fixed earnings may apply for such kind of bankruptcy proceeding, which makes it possible for persons in debt to retain their homes or properties. In order to pay back
the financial obligations, a certain percentage of the income must be allocated for them.
