WHAT ARE THE TYPES OF BANKRUPTCY?
Quick Page Index
- 1 WHAT ARE THE TYPES OF BANKRUPTCY?
- 1.1 THERE ARE TWO TYPES OF BANKRUPTCY: (1) LIQUIDATION & (2) REORGANIZATION
- 1.2 LIQUIDATION FOR INDIVIDUALS
- 1.2.1 In a Chapter 7 bankruptcy, the individual is allowed to keep certain exempt property.
- 1.2.2 Some debts are considered to so important that Congress decided those debts were non-dischargeable.
- 1.2.3 The law requires that all debts must be listed on bankruptcy schedules, even if not dischargeable.
- 1.2.4 Fully secured creditors will retain their lien against the collateral.
- 1.3 REORGANIZATION FOR INDIVIDUALS
- 1.3.1 The Debtors file documents called Petition, Schedules, Statement of Affairs, along with some other documents with the Bankruptcy Court.
- 1.3.2 Chapter 13 varies widely from district to district depending on the custom and attitudes of the local trustees and judges about what is “reasonable” and in “good faith”.
- 1.4 Liquidation for Business – Chapter 7
- 1.5 REORGANIZATION FOR BUSINESSES
- 1.5.1 Reorganizations:
- 1.5.2 Unlike liquidation, reorganization provides the business debtor with an opportunity to retain continue to operate the business and retain assets it would lose in a chapter 7.
- 1.5.3 Reorganizations can be used to strip wholly unsecured mortgages on land or to pay the fair market value of property.
- 1.5.4 To be eligible for a reorganization bankruptcy, the debtor must have sufficient income to make a reorganization plan feasible.
EACH TYPE OF BANKRUPTCY IS A SPECIFIC CHAPTER IN THE BANKRUPTCY CODE.