Bankruptcy

There are different chapters in the United States Bankruptcy Code which allow for different types of debt relief for individuals, businesses and other entitites.  The chapter of the bankruptcy code defines what can and cannot occur and be accomplished within the bankruptcy proceeding.  Here is a sampling:

 

Chapter 7

For individuals and sometimes small businesses who are liquidating and having their debts discharged (if they are dischargeable) without doing any repayment and for removal of certain judgments.

 

Chapter 13

For individuals who are reorganizing and repaying debt.  Chapter 13 allows you to keep your assets, remove certain judgments and liens, catch up on past due payments on mortgages, all within a budget over 3 to 5 years.

 

Chapter 11

This chapter is designed primarily for businesses that want to remain in business, but sometimes is also used by individuals for debt reorganization.  Chapter 11 offers greater felxibility and options than other chapters and, in the hands of an experienced bankruptcy reorganization attorney, can be extremely useful even in lower debt cases.  The purpose of a Chapter 11 case is to get a Plan of Reorganization (repayment) confirmed by the Court.  In order for the plan to be approved, typically the creditors must vote in favor of the Plan.  This requires careful, time-consuming planning by both the business owner and experienced bankruptcy attorney.