CHAPTER BANKRUPTCY TYPES

2007-05-02 10:04:19

( Legal )



The United States has a Bankruptcy Code that discusses in details the provisions for various situations of bankruptcy of individuals and organizations. It outlines six types of bankruptcy discuss in six different chapters related to bankruptcy hence the word chapter bankruptcy.

Chapter 7

Chapter 7 bankruptcy is a type of bankruptcy defined by law that discusses the proceeding of liquidating the assets of a person filing for bankruptcy. It outlines the process that the person in debt has to undergo in order to pay off his creditors. A bankruptcy trustee assigned by the court will handle the liquidation of the debtor’s properties qualified under the Chapter 7 bankruptcy.

Chapter 9

Chapter 9 bankruptcy is a municipality bankruptcy code that deals with the reorganization of cities, towns, villages, counties, taxing districts and school districts. Its goal is to protect financially troubled municipalities from its creditors by negotiating a plan to adjust its debt from its creditors. Part of plan negotiation is the reorganization of these municipalities to ensure earnings to pay off debts from creditors. This type of chapter bankruptcy, however, do not provide for the liquidation of the assets of the municipalities filing for bankruptcy.

Chapter 11

Chapter 11 bankruptcy provides for the process of reorganization of businesses filing for bankruptcy. This type of bankruptcy recognizes the ability of the business to continue operating by reorganizing its structure of business with the direct supervision of the court.

Chapter 13

Chapter 13 bankruptcy is the process of rehabilitating an individual’s financial situation to pay off creditors within three to five years. Individuals with fixed income can benefit filing for this type of bankruptcy.

Chapter 14

Chapter 14 bankruptcy details the provisions involved for debtor’s imprisonment and work areas. This chapter bankruptcy deals with debtors who are missing and are bankrupt.

Chapter 15

Chapter 15 bankruptcy deals with bankruptcy issues that have international connection. Businesses filing bankruptcy in the United States might have assets distributed internationally that must be included in its liquidation.


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