Chapters in bankruptcy
The United States bankruptcy code is divided into chapters, and each chapter represents a section of the code. The different chapters will help various debtors in their unique situations. Some are personal bankruptcies, while others are farmers and business bankruptcies.
Chapter 7 bankruptcy is a type of bankruptcy that eliminates all of your qualifying debt without you having to make a payment plan. Chapter 7 is the most common bankruptcy filed by personal debtors. Individual filers, businesses, and corporations can file for Chapter 7 bankruptcy protection. Chapter 7 is considered a liquidation bankruptcy. All of your nonexempt property may be sold, and the funds distributed to your creditors to be applied to your debt. Most personal filers do not lose any property chapter 7 due to the amount of exemptions available.
Chapter 11 bankruptcy is for large complex business organizations seeking protection from the courts while they work out a financial plan. The plan will include how to get back on sound financial standing while continuing to operate the business now and in the future.
Chapter 12 bankruptcy is for family farmers who need bankruptcy protection while getting their finances in order. Much like Chapter 13, the debtor will still owns all of their assets and will make the court-approved plan to repay their creditors over a number of years.
Chapter 13 bankruptcy is a personal bankruptcy that allows you to keep all of your assets and pay a court-approved repayment plan to your trustee to distribute to your creditors. The repayment plan can last from three to five years. At the end of your payment plans, if any unsecured debt remains, it will be discharged with the bankruptcy courts.
If you are overwhelmed with debt and would like financial relief. Contact a Folsom bankruptcy attorney to find out which chapter of the bankruptcy code will be best for you.