The most common types of bankruptcy are Chapter 7, Chapter 11, and Chapter 13 according to U.S. Bankruptcy Code. In previous article, we introduce
Chapter 13: Debt Repayment with Lowered Debt Covenants or Specific Payment Plans.
Different from chapter 7 that is designed for individual with few assets and chapter 11 that is designed for business who wants to create probability again, the filers for chapter 13 are almost individuals who make too much money to qualify for chapter 7 and those businesses who have consistent income but do not want to file chapter 11.
Chapter 13 is also known as a wage earner’s plan, since this chapter allows individuals and businesses to create workable debt repayment plans. The repayment plans are commonly in installments over the course of a three-to-five-year period. If you file a chapter 13 and commit to follow this kind of course, the courts would allow you to keep all of your property, including otherwise nonexempt property, and you do not need to repay for your creditors. Under this circumstance, chapter 13 just extends your repayment period instead of making you escape from the debts.
Other Minor Types of Bankruptcy Filings
Although chapter 7, 11 and 13 are three most common types, the Code also provides lots of minor types for dealing with various types of bankruptcy.
For example, chapter 9 bankruptcy allows financially distressed municipalities, such as cities, towns, villages, counties, and school districts, to claim themselves as bankruptcy and delay their repayments. If a municipality files a chapter 9 bankruptcy, it does not have to liquidate assets to repay its debts, and it is allowed to develop a plan for repaying its debt over a period of time.
Chapter 12 bankruptcy provides relief to agricultural area such as family farms and fisheries. Once encountering some natural disasters, agricultural industries might face a severe financial situation. By filing the chapter 12 bankruptcy, these industries are allowed to maintain their business while working out a productive plan to repay their debts.
Chapter 15 bankruptcy works for cross-border cases, which is concerned with international business. This type of petition is usually filed in the debtor’s home country, and it’s usually must more complicated than other type of bankruptcy.