Different Kinds of Bankruptcies
Many people are unaware that there are quite a few different kinds of bankruptcies that can be filed for. The different bankruptcy types are reserved for different purposes and for different entities. It’s important to understand as much as possible about them to see which one works best for an individual or business. Let’s take a look at the different types of bankruptcies and who should file for them if needed.
Chapter 7 – This type of bankruptcy is filed by individuals. It’s also known as the ‘liquidation’ bankruptcy. That is because assets will be required to be sold in order to make the capital to pay back creditors who are owed. Houses sometimes have to be sold as well so it’s important to have an experienced lawyer who understands bankruptcy to assist.
Chapter 9 – A Chapter 9 bankruptcy is used by municipalities, towns, cities, and school districts to pay back debts. A plan will need to be established that lays out how the debts will be paid back.
Chapter 11 – Chapter 11 bankruptcies are used by businesses and corporations. A plan will need to be approved by creditors and a court for how the corporation or business will continue to operate while paying back debts.
Chapter 12 – This bankruptcy type is used by fishermen and farmers. It also helps protect assets and property from being sold off when this bankruptcy is declared. The term limit for the repayment generally lasts from 3 to 5 years.
Chapter 13 – A Chapter 13 bankruptcy is also filed by individuals, like with chapter 7. It differs from chapter 7 though in that instead of liquidating assets a monthly repayment plan is established. The terms are generally from three to five years and the monthly amount needing to be paid will depend upon the total amount owed and also how much money the person makes per month.
Chapter 15 – Chapter 15 is quite a new chapter in the world of bankruptcy as it was only established in 2005. This bankruptcy type is used in international cases where someone owns property or assets in multiple countries that includes the United States.
Legal Counsel Can Assist
If you or someone you know believe that you need to file for bankruptcy then consider reaching out to a bankruptcy lawyer in your area. These lawyers have generally worked on numerous cases and know how to navigate the difficult waters of bankruptcy. Their guidance and support can help out any client.
Thanks to The Law Offices of Ronald I. Chorches for their expertise in the subject of bankruptcy and bankruptcy law.