What is bankruptcy?

Bankruptcy is a way for people or businesses who owe more money than they can pay right now,(debtors),to either work out a plan to repay the money over time in a chapter 11, chapter 12 , or chapter 13 case, or wipe out,(discharge) most of their bills in a chapter 7 case. While either the debtor is working out a plan or the trustee is gathering the valuable assets to sell, the Bankruptcy Code provides that creditors must stop all collection efforts against the debtor. When the bankruptcy petition is stamped 'Relief Ordered' upon filing, you are immediately proceed from your creditors. What chapter you choose to file under, what bills can be eliminated, how long payments can be stretched out, what possessions you can keep, and other details are controlled by the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. These are federal laws, which means they apply all over the United States.

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Who can file for bankruptcy?

Any person, partnership, corporation or business trust may file a bankruptcy. If the person or entity who owes the money files a petition to start the bankruptcy, it is called a voluntary bankruptcy. If the people or the entities owed the money file a petition it is called an involuntary bankruptcy. In an involuntary case the debtor gets a chance to contest the petition and contend it should not be in bankruptcy. Voluntary cases can be filed under chapters 7,9,11,12, and 13. Involuntary cases can only be filed under chapters 7 and 11. Certain types of entities, such as banks and insurance companies, may not be eligible to file bankruptcy, however, almost all other entities can file a bankruptcy.

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What are the different 'chapters' in bankruptcy?

-CHAPTER 7

This is the liquidation chapter of the Bankruptcy Code. Chapter 7 cases are commonly refereed to as 'straight bankruptcy' or 'liquidation' cases, and may be filed by an individual, corporation, or a partnership. Under chapter 7, a trustee is appointed to collect and sell all property that is not exempt and use any proceeds to pay creditors. In exchange for this the debtor gets a discharge, which means that the debtor does not have to pay certain debts.

-CHAPTER 13

This is the debt repayment for individuals with regular income whose debts do not exceed $1,230,650. Chapter 13 bankruptcy generally permits individuals to keep their property by repaying creditors out of their future income. Each chapter 13 debtor proposes a repayment plan that must be approved by the court. After completion of the plan most chapter 13 debtors receive a discharge of their debts.

-CHAPTER 11

This is the reorganization chapter available to businesses and individuals who have substantial assets and/or income to restructure and repay their debts. Creditors vote on whether to appecpt or reject a plan or reorganization which must be approved by the court.

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Which chapter is right for me?

The decision whether to file a bankruptcy and which chapter to file under depends on the particular circumstances of the debtor. That is why we offer services to suit your particular needs and case. There are so many options and we can help you find the one that will suit your need the best.

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What is a discharge?

The discharge order is issued by the court and permanently prohibits creditors from taking action to collect dischargeable debts against the debtor personally.

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