Chapter 7 - STRAIGHT BANKRUPTCY or LIQUIDATION
A
Chapter 7 bankruptcy offers a discharge or release from liability for certain
types of debts. Both individuals and married couples can file Chapter 7
petitions. A Chapter 7 bankruptcy will provide a fresh start when the debtor
has insufficient income to pay the debts that have accumulated. The debtor is
allowed to keep certain property (exempt property) but property that is not
exempt may be sold by a special trustee to pay as some of the debt that is
being discharged.
Debtors that are employed and want to keep their
house or a continue to pay off a car may be able to do so in a Chapter 7
bankruptcy. Chapter 7 bankruptcies are most appropriate for debtors that do not
have a significant amount of property over that which is exempt.
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Chapter 13 - WAGE EARNER'S BANKRUPTCY
Some individuals who have a job or are self-employed
may not be eligible for a Chapter 7 bankruptcy because they make too much money
under the bankruptcy guidelines or have significant property that they want to
keep that is not exempt. A Chapter 13 bankruptcy may allow debtors to pay off a
small percentage of the money they owe but still be discharged from a very high
percentage of their debts.
In a Chapter 13 bankruptcy, the debtor is
allowed to cure defaults and stop foreclosures or repossessions by making
payments through a court-approved plan that meets certain guidelines. The
payments are made to a court-appointed trustee who will disburse the payments
to the creditors in keeping with the plan.
My business background
provides a significant advantage in advising self-employed persons who need
bankruptcy relief but want to stay in business. A lot depends on the structure
of the debtors business and knowing how to use the bankruptcy laws to the best
of the business owners advantage is can be extremely valuable.
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Chapter 11 - BUSINESS
REORGANIZATION
Depending on the ownership of the assets of a
business and how the business debt is structured, a Chapter 11 bankruptcy may
be necessary for a business owner instead of or along with a personal Chapter
13 filing. The Chapter 11 bankruptcy allows an ongoing to reorganize. The
bankruptcy court also appoints a trustee to monitor compliance of the debtor in
possession with the reporting requirements. In a Chapter 11 proceeding, the
debtor files a plan of reorganization that must be approved by the court.
Different proceedings apply to a "small business case" which has been filed by
a "small business debtor" and normally proceeds more quickly than other Chapter
11 cases.
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CORPORATE LIQUIDATIONS
Statutory liquidations for
general for profit corporations, limited liability companies, and not for
profit corporations may be appropriate in certain circumstances rather than
bankruptcies.
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