What Is The Difference Between The Chapter 7, 11, and 13 Bankruptcies?
What is chapter 7:
In a chapter 7 bankruptcy, the bankruptcy trustee collects and sells the debtor’s nonexempt assets to repay creditors. An individual, a partnership. corporation, or another business entity may qualify for chapter 7. A chapter 7 case begins with the debtor filing a petition with the bankruptcy court.
In addition to the petition, the debtor must also file with the court:
(1) schedules of assets and liabilities;
(2) a schedule of current income and expenditures;
(3) a statement of financial affairs; and
(4) a schedule of executory contracts and unexpired leases.
– for more information visit https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics
What is chapter 11:
As summarized by he Administrative Office of the U.S. Courts, a chapter 11 of the Bankruptcy Code “generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.”
What is chapter 13:
This chapter of the Bankruptcy Code provides for adjustment of debts of an individual with regular income. Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.
A chapter 13 bankruptcy is also called a wage earner’s plan. That could enable individuals with a regular income to pay or repay their debts thru installments that has monthly income with a less than applicable median that has three years if the court approves it,
” (1) If the debtor’s current monthly income is greater than the applicable state median, the plan generally must be for five years. In no case may a plan provide for payments over a period longer than five years.” 11 U.S.C. § 1322(d). During this time the law forbids creditors from starting or continuing collection efforts.
Chapter 7 vs. Chapter 11:
Chapter 7 bankruptcy is sometimes called “liquidation” bankruptcy. Businesses or individuals that are going through this kind of bankruptcy may lose their assets to pay their debts. At the same time, Chapter 11 debtors would need to reorganize their businesses so that such businesses can still operate (but the future monthly earnings will be used to pay your debts.)
Chapter 7 vs. Chapter 13:
Chapter 7 bankruptcy revolves around “liquidation”. Businesses or individuals are required to sell off their property so that they could repay their debts. At the same time, Chapter 13 does not provide the same level of debt relief like chapter 7 does, however it allows the filing party to retain their company or business.
Chapter 11 vs. chapter 13:
Both bankruptcy types allow debtors to stay in business and restructure their finances. While chapter 11 can be done by almost any individual or business, Chapter 13 is reserved for individuals with stable incomes. It also has specific debt limits. The approval process for a Chapter 13 bankruptcy is generally much more expedient
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Bankruptcy is often the last but necessary resort. It is a delicate and complex proceeding, and you want someone with plenty of experience to consult you and guide you through the process and help you determine the scope of the discharge.If you would like to find out whether bankruptcy is the right option for you, please request a call-back by submitting a short online form. All initial consultations are free and confidential.