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Bankruptcy chapters-Icy-spun-03/04 Bankruptcy Chapters Simplified

Different bankruptcy chapters apply to different types of petitioners or filers. The Bankruptcy Code cites which can be applied to different scenarios involving bankruptcy filing. Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 mandates that all debtors must undergo credit counseling. If you happen to be one, you must get either a pre-bankruptcy before bankruptcy can be filed or pre-discharge bankruptcy education before discharging debts. Always pick a counseling agency that is duly approved and recognized by the United States Trustee's office.

Effects of Individual And Corporate Bankruptcy


Chapter 7, also known as the liquidation or straight bankruptcy, is an available remedy for an individual, partnership, or other business unit. It is one of the court-assisted bankruptcy chapters. You can file bankruptcy under Chapter 7, no matter how much you owe or whether you are solvent or insolvent. There are no repayment plans that are allowed to be filed under this bankruptcy chapter. It works through the appointment of a bankruptcy trustee who determines what legally available asset or property you have that can be sold and uses the profits to pay off creditors. You may be able to keep some properties that are exempt from court seizure.

Why You Should Choose Reorganization Bankruptcy?


Distressed partnerships, corporations, businesses, or individuals can file bankruptcy under Chapter 11 to allow them to come up with a reorganization plan focused on paying off their creditors. If Chapter 11 applies to you, you need to file written disclosure statements in addition to a reorganization plan. You are given 120 days or, if extended by the court, 18 months to file the plans. Otherwise, your creditors will be allowed to submit their own. The law treats small business cases in a different way from an ordinary bankruptcy case. They end more quickly than other Chapter 11 cases and other bankruptcy chapters since filing deadlines are tighter and filing extensions are rarely granted. A small business debtor case is determined by applying the dual-part test: Debtor is engaged in actual business activities and holds a total debt of not more than $2,343,300; and Debtors case has no creditors committee appointed by the U.S. Trustee or, if one is appointed, such committee is inadequately active to give proper supervision of the debtor

The U.S Trustee plays an active role in overseeing the activities of the small business debtor. If you fall under this category, the Trustee shall interview you, ask about the business plans, evaluate your businesss viability, and explain your responsibility of filing reports or other documents required by the court.

The Family Farmers Or Fishermen Bankruptcy Requisite


Do you belong to family farmers or family fishermen with regular income? Chapter 12 is the most appropriate out of all the bankruptcy chapters for you. You can still control and own your properties even if you voluntarily filed for bankruptcy under Chapter 12. The indispensable requirement of regular income is to ensure that your annual income is amply stable and regular to allow the timely payments under your three- or five-year repayment plans.

When Is Wage Earners Bankruptcy Appropriate?


Only self-employed or individuals managing an unincorporated business can file bankruptcy under Chapter 13. Your debts must be lower than the amount set by law. Your corporation or your partnership cannot obtain relief under this chapter. These bankruptcy chapters are intended to give everyone a chance to meet their debts first and return to the state of financial stability. Declaration of bankruptcy is only a course of last resort to protect both creditors and debtors and obtain that coveted fresh start. Summary: Bankruptcy chapters may be a bit confusing when read in its original text. We can help you clarify the highlights of the legal text through this comprehensive summary. KP: Bankruptcy chapters

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