My OperaThe Four Chapters of Bankruptcy
Friday, September 24, 2010 6:29:05 AM
The Four Chapters of Bankruptcy
The goal of most personal bankruptcy is to cancel your existing debts and allow you a fresh start. If you are granted Bankruptcy, you don't have to pay the unsecured debts that you got yourself into before you filed your bankruptcy. But you are liable for all debts you run up after bankruptcy. The four chapters of bankruptcy are listed below, with the most common type first:
Chapter 7 Bankruptcy
Liquidation, is definitely the most common type of bankruptcy. Liquidation involves the appointment of a trustee, who collects the nonexempt property of the debtor, sells it, and then redirects the profits to the creditors. In California chapter 7 can't be utilized to get rid of recent taxes, child support, alimony, student loans, drunk-driving judgments, criminal fines or restitution, or debts which involved fraud or intentional wrongdoing.
Chapter 7 consists of liquidation of all non-exempt assets (normally sold by a court-appointed official or turned over to creditors) and the discharge of financial obligations for exempt assets. [What is usually considered exempt as well as non-exempt differs among the federal and state governments, and state regulations may prevail over the federal.]
Chapter 13 Bankruptcy
If you have a regular income and unsecured debt less than $336,900 and secured debt equal of less than $1,010,650, this repayment plan is a practical type of bankruptcy. You can expect to retain all property and make regular payments to the Chapter 13 trustee which will pay creditors off over three to five years. Repayment plans in Chapter 13 can range from 10 to 100 percent, dependent on your income as well as the amount and kind of debt.
Secured creditors, as well as fully secured first mortgages and maybe second or third mortgages, would continue to be given regular repayments outside the plan. Specific obligations that cannot be discharged within Chapter 7 could be discharged in Chapter 13, including recent debt, criminal fines, and debt suffered by fraud. Chapter 13 also helps you protect against foreclosures and repossessions while catching up on their secured debts.
Chapter 12 Bankruptcy
Family farmers can take advantage of this simplified reorganization. Modeled after Chapter 13, Chapter 12 makes it possible for the debtor to retain all property and pay creditors out of potential income.
Chapter 11 Bankruptcy
In the event you own a business or corporation, Chapter 11 is known as a reorganization proceeding to consider. There are distinctive conditions you will need to meet. Some people whose financial obligations are larger than the limits of Chapter 13 may possibly file Chapter 11. In Chapter 11, the debtor commonly remains in possession of assets and continues to operate any business, subject to the oversight of the court and the creditors committee. You propose a plan of reorganization to the creditors, who vote on it. Should the majority accept it, your plan will be verified by the court and becomes binding to you and your creditors. Plans can call for repayment out of future income or sales of some or all of the assets.
The goal of most personal bankruptcy is to cancel your existing debts and allow you a fresh start. If you are granted Bankruptcy, you don't have to pay the unsecured debts that you got yourself into before you filed your bankruptcy. But you are liable for all debts you run up after bankruptcy. The four chapters of bankruptcy are listed below, with the most common type first:
Chapter 7 Bankruptcy
Liquidation, is definitely the most common type of bankruptcy. Liquidation involves the appointment of a trustee, who collects the nonexempt property of the debtor, sells it, and then redirects the profits to the creditors. In California chapter 7 can't be utilized to get rid of recent taxes, child support, alimony, student loans, drunk-driving judgments, criminal fines or restitution, or debts which involved fraud or intentional wrongdoing.
Chapter 7 consists of liquidation of all non-exempt assets (normally sold by a court-appointed official or turned over to creditors) and the discharge of financial obligations for exempt assets. [What is usually considered exempt as well as non-exempt differs among the federal and state governments, and state regulations may prevail over the federal.]
Chapter 13 Bankruptcy
If you have a regular income and unsecured debt less than $336,900 and secured debt equal of less than $1,010,650, this repayment plan is a practical type of bankruptcy. You can expect to retain all property and make regular payments to the Chapter 13 trustee which will pay creditors off over three to five years. Repayment plans in Chapter 13 can range from 10 to 100 percent, dependent on your income as well as the amount and kind of debt.
Secured creditors, as well as fully secured first mortgages and maybe second or third mortgages, would continue to be given regular repayments outside the plan. Specific obligations that cannot be discharged within Chapter 7 could be discharged in Chapter 13, including recent debt, criminal fines, and debt suffered by fraud. Chapter 13 also helps you protect against foreclosures and repossessions while catching up on their secured debts.
Chapter 12 Bankruptcy
Family farmers can take advantage of this simplified reorganization. Modeled after Chapter 13, Chapter 12 makes it possible for the debtor to retain all property and pay creditors out of potential income.
Chapter 11 Bankruptcy
In the event you own a business or corporation, Chapter 11 is known as a reorganization proceeding to consider. There are distinctive conditions you will need to meet. Some people whose financial obligations are larger than the limits of Chapter 13 may possibly file Chapter 11. In Chapter 11, the debtor commonly remains in possession of assets and continues to operate any business, subject to the oversight of the court and the creditors committee. You propose a plan of reorganization to the creditors, who vote on it. Should the majority accept it, your plan will be verified by the court and becomes binding to you and your creditors. Plans can call for repayment out of future income or sales of some or all of the assets.
