Bankruptcy
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| Types of Bankruptcy |
| Chapter 7 |
Chapter 7 cases are commonly referred 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 to use any proceeds to pay creditors. In the case of
Chapter 7 is the liquidation chapter of the Bankruptcy Code. an
individual, the debtor is allowed to claim certain property
exempt. In exchange for this, the debtor gets a discharge, which
means that the debtor does not have to pay certain types of
debts. Corporations and partnerships do not receive
discharges. Consequently, any individuals legally liable for the
partnership's or corporation's debts will remain liable.
Therefore, individual bankruptcies may be required as well as
the corporation or partnership bankruptcy.
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 to use any proceeds to pay creditors. In the case of
Chapter 7 is the liquidation chapter of the Bankruptcy Code. an
individual, the debtor is allowed to claim certain property
exempt. In exchange for this, the debtor gets a discharge, which
means that the debtor does not have to pay certain types of
debts. Corporations and partnerships do not receive
discharges. Consequently, any individuals legally liable for the
partnership's or corporation's debts will remain liable.
Therefore, individual bankruptcies may be required as well as
the corporation or partnership bankruptcy.
| Chapter 9 |
Chapter 9 is known as the municipality bankruptcy chapter. The
principal use of this type of chapter is to give a municipality
bankruptcy protection. Reorganization of debt can be
accomplished through this Chapter.
principal use of this type of chapter is to give a municipality
bankruptcy protection. Reorganization of debt can be
accomplished through this Chapter.
| Chapter 11 |
Chapter 11 is the most complex bankruptcy filing and the one
that most troubled businesses file (although some individuals
may file it as well). In a Chapter 11 bankruptcy filing, the debtor
continues to function, maintains ownership of all assets, and
tries to work out a reorganization plan to pay off creditors.
In the past, a business had an almost unlimited amount of time
to come up with their reorganization and payment plan. The
Bankruptcy Abuse Prevention and Consumer Protection Act of
2005 imposes a 120-day time limit. If the debtor has not own
plans.
that most troubled businesses file (although some individuals
may file it as well). In a Chapter 11 bankruptcy filing, the debtor
continues to function, maintains ownership of all assets, and
tries to work out a reorganization plan to pay off creditors.
In the past, a business had an almost unlimited amount of time
to come up with their reorganization and payment plan. The
Bankruptcy Abuse Prevention and Consumer Protection Act of
2005 imposes a 120-day time limit. If the debtor has not own
plans.
| Chapter 12 |
Chapter 12 is specifically for farm owners and fishermen. The
debtor still owns and controls his assets and works out a
repayment plan with the creditors.
debtor still owns and controls his assets and works out a
repayment plan with the creditors.
| Chapter 13 |
Chapter 13 is the debt repayment chapter for individuals with
regular income whose debts do not exceed $1,347,550
($336,900 in unsecured debts and $1,010,650 in secured
debts), including individuals who operate businesses as sole
proprietorships. It is not available to corporations or
partnerships. Chapter 13 generally permits individuals to keep
their property by repaying creditors out of their future income.
Each chapter 13 debtor proposes a repayment plan which must
be approved by the court. The amounts set forth in the plan
must be paid to the chapter 13 trustee who distributes the
funds for a percentage fee. Many debts that cannot be
discharged can still be paid over time in a chapter 13 plan.
After completion of payments under the plan, chapter 13
debtors receive a discharge of most debts.
regular income whose debts do not exceed $1,347,550
($336,900 in unsecured debts and $1,010,650 in secured
debts), including individuals who operate businesses as sole
proprietorships. It is not available to corporations or
partnerships. Chapter 13 generally permits individuals to keep
their property by repaying creditors out of their future income.
Each chapter 13 debtor proposes a repayment plan which must
be approved by the court. The amounts set forth in the plan
must be paid to the chapter 13 trustee who distributes the
funds for a percentage fee. Many debts that cannot be
discharged can still be paid over time in a chapter 13 plan.
After completion of payments under the plan, chapter 13
debtors receive a discharge of most debts.
| Chapter 14 |
Chapter 14 governs involuntary bankruptcies. In this Chapter,
creditors file the bankruptcy petition against their debtors. Use
of this Chapter is rare, and most of these cases occur in the
context of corporate debtors.
creditors file the bankruptcy petition against their debtors. Use
of this Chapter is rare, and most of these cases occur in the
context of corporate debtors.
| Chapter 15 |
This Chapter gives bankruptcy rights to foreigners to take part
in a state’s bankruptcies case.
in a state’s bankruptcies case.
Bankruptcy is a way for people and 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 case under chapter
11, chapter 12 or chapter 13, or to wipe out (‘discharge’) most
of their bills in a chapter 7 case. The filing of a bankruptcy
petition immediately stops most actions to collect debts which
were due at the time of filing, including law suits, repossessions,
and foreclosures. Based upon the circumstances, the court
may, however, permit some eviction, repossession and
foreclosure actions to continue even after the case is filed.
What chapter you choose to file under, what bills can be
eliminated, how long payments can be stretched out, 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. The Code and
Rules are found in Title 11 of the United States Code. The
various sections of the Bankruptcy Code are referred to
throughout this booklet as "11 U.S.C. § .” In addition to the
Bankruptcy Code and Rules, what property you can keep will
be affected by sections 703 and 704 of the California Code of
Civil Procedure.
money than they can pay right now (‘debtors’) to either work out
a plan to repay the money over time in a case under chapter
11, chapter 12 or chapter 13, or to wipe out (‘discharge’) most
of their bills in a chapter 7 case. The filing of a bankruptcy
petition immediately stops most actions to collect debts which
were due at the time of filing, including law suits, repossessions,
and foreclosures. Based upon the circumstances, the court
may, however, permit some eviction, repossession and
foreclosure actions to continue even after the case is filed.
What chapter you choose to file under, what bills can be
eliminated, how long payments can be stretched out, 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. The Code and
Rules are found in Title 11 of the United States Code. The
various sections of the Bankruptcy Code are referred to
throughout this booklet as "11 U.S.C. § .” In addition to the
Bankruptcy Code and Rules, what property you can keep will
be affected by sections 703 and 704 of the California Code of
Civil Procedure.
| United States Bankruptcy Court Northern District of California |