Monday, September 21, 2009

Types of Bankruptcy Filings

The current bankruptcy laws, enacted by Congress in 1978, are known as the US Bankruptcy Code. The Code is set forth in Title 11 of the US Code. It consists of nine chapters: 1, 3, 5, 7, 9, 11, 12, 13 and 15. Chapters 1, 3 and 5 are of general applicability. Chapters 7, 9, 11, 12, 13 and 15 each deal with a particular type of bankruptcy proceeding. The Code refers to the financially troubled person or entity in need of bankruptcy assistance as the "debtor."


Debtors file bankruptcy for a variety of reasons, including divorce, job loss and health problems. A debtor need not be insolvent to file for bankruptcy. Debtors are entitled to a respite from most collection activities upon filing bankruptcy, pursuant to various stay provisions called the "Automatic Stay." By filing for bankruptcy, debtors may obtain a discharge of personal liability from many debts and may be able to restructure others.

There are two basic types of bankruptcy proceedings: liquidations and reorganizations. In liquidations, governed by chapter 7, the debtor's nonexempt pre-filing assets are sold for the benefit of creditors. In exchange for surrendering these assets, the debtor generally obtains a discharge of personal liability for prebankruptcy debts and may enjoy assets acquired after the filing.

Chapters 11, 12 and 13 involve various types of reorganization or payment plans. In bankruptcy reorganizations, the debtor's assets are not sold, unless otherwise provided for in the plan. Indeed, many debtors choose reoganizations in order to keep pre-bankruptcy assets. Individual debtors, for instance, often file chapter 13 cases in order to save their homes from foreclosure. Reorganization bankruptcies allow debtors the opportunity to restructure debts and to pay them, possibly in part and not in full, through a plan funded by post-filing income. A debtor in a reorganization bankruptcy may obtain a discharge of most pre-confirmation debts that are provided for, but not paid in full, in the plan. Source: American Bankruptcy Institute.


Warmest Regards,

Bob Schaller


Your Bankruptcy Advisor Blog
By: Attorney Robert Schaller (Bob's bio) of the Schaller Law Firm

Bob is a member of the National Bankruptcy College Attorney Network, American Bankruptcy Institute and the National Association of Consumer Bankruptcy Attorneys.

I encourage you to SUBSCRIBE to this blog by completing the box to the right of this post so you will automatically receive future blog postings. Next, you can review past and future blogs at any time by clicking the "archive" link in the column to the right of this posting. Plus, you are invited to submit a question by utilizing the "question" box in the column to the right of this posting.


For information about Chapter 7 bankruptcy Click Here

For information about Chapter 13 bankruptcy Click Here

You are invited to contact Attorney Schaller at 630-655-1233 or visit his website at http://www.schallerlawfirm.com/to learn about how the bankruptcy laws can help you.

NOTE: Robert Schaller looks forward to the opportunity to talk with you about your legal issues. But please remember that all information on this blog is for advertising and general informational purposes only. Please read Bob's disclaimer.

I recommend that you review a few other blogs that may be of interest to you. These blogs are identified in the right column and are set forth below: bankruptcy issues blog; bankruptcy and family law issues blog; bankruptcy and employment issues blog; and bankruptcy and student loan issues blog.

No comments:

Post a Comment