Most people have heard of the word bankruptcy, but not everyone may know what this really means beyond that. Of course, there are stigmas against those who have to file for bankruptcy, but in reality, it can be a useful resource if someone is dealing with financial problems that they just don’t see a way out of. Bankruptcy can help a person eradicate debt or establish a plan for them to pay it back in a more affordable way.
There are six bankruptcy chapters that someone may choose from, but it requires assistance from a bankruptcy lawyer to make sure the correct chapter is filed for. The bankruptcy chapters described below vary, and may be more suitable for an individual, corporation, municipality, or other circumstance.
Chapter 15 Bankruptcy
This chapter offers a way to deal with bankruptcy cases that entail more than one country. The purpose of Chapter 15 is to provide collaboration between foreign courts, the U.S. bankruptcy court, and a foreign debtor. Essentially, a foreign debtor who has assets in several countries must file under this chapter.
Chapter 7 Bankruptcy
This chapter may be referred to as the liquidation bankruptcy chapter, and is the most frequently filed bankruptcy chapter across the nation. Chapter 7 allows someone to liquidate their property in exchange for paying off creditors, however, individuals are permitted to keep certain exempt property.
Chapter 9 Bankruptcy
This bankruptcy chapter is intended for municipalities, such as school districts, towns, and counties. Municipalities that file for Chapter 9 bankruptcy are protected from creditors as they establish a plan for adjusting debts.
Chapter 13 Bankruptcy
Otherwise referred to as a wage earner plan, this chapter allows the person with regular income to create a plan to pay back either a part or the entirety of their debts. An advantage of Chapter 13 bankruptcy is that it enables individuals to avoid home foreclosure. If you prefer to keep most of your assets and pay off debts in an amount that is affordable over the course of 3-5 years, then this chapter may be the most suitable.
Chapter 12 Bankruptcy
This chapter of bankruptcy is meant for family fisherman or family farmers that are experiencing immense financial distress. By filing under Chapter 12, the individual in debt creates a plan to pay back their creditors over the span of 3-5 years. There are many variables that may cause a family fisherman or farmer to endure financial hardship, especially if they are struggling to grow, sell, or catch food items.
Chapter 11 Bankruptcy
This chapter may be called reorganization bankruptcy, and is offered to both businesses and individuals. A business owner can stay in control of their business operations while not having to sell off assets. This chapter allows the business owner to get out of bankruptcy while focusing on giving their business a stronger financial foundation. During this time, a business owner can request a change in their interest rates, payment amounts, and debt terms.