Bankruptcy
Bankruptcy Types
Your attorney will help you decide which type (or chapter) is right for you. Here is a brief description of each of the different types of bankruptcies:
Chapter 7 – Liquidations
The purpose of a chapter 7 is to allow a person to obtain a fresh start, free from creditors and free from the pressures of over-whelming debt. After filing for relief, an individual debtor may receive a discharge of debts.
A discharge permanently prohibits creditors from attempting to collect those debts listed by the debtor on the bankruptcy schedules. However, some debts are non-dischargeable. They include certain taxes, student loans, alimony, and child support to name just a few.
You are allowed to keep any assets (example mortgages, car payments) you choose as long as you can continue to make regular monthly payments.
Court filing fee: $299.00 (price subject to change)
Chapter 11 – Reorganizations
The purpose of a chapter 11 bankruptcy is to allow an individual or business a limited amount of time free from creditor’s collection efforts to restructure its financial obligations so it may continue to operate in a normal fashion under a court approved plan of reorganization. Creditors of a business filing a chapter 11 vote on the repayment plan and the plan must be approved by the
court. The advantage of chapter 11 is if a trustee is not appointed, the individual or business maintains control of its property during the bankruptcy and allow time to deal with creditors and to negotiate a plan of repayment.
Chapter 11 is normally for corporations and businesses but individuals may also file chapter 11. Chapter 11 is complicated there may be advantages to filing under a different chapter. An individual should consult with an attorney before making the decision to file chapter 11.
Court filing fee: $1039.00 (price subject to change)
Chapter 12 – Family Farmer Debt Adjustment
The chapter 12 bankruptcy law was created to help family farmers who need to reorganize their debts while keeping their land and farming business. Chapter 12 is meant to assist farmers who have potential to reorganize and to allow them relief from a heavy debt burden, while at the same time allow farmers to pay their creditors what is deemed reasonable under the terms of a court approved repayment plan.
The rules of a chapter 12 bankruptcy are modeled closely after those of a chapter 13. A chapter 12 case may only be filed by certain family farmers and businesses. A trustee is appointed, but the farmer usually remains in possession of the farm while formulating a plan.
Court filing fee: $239.00 (price subject to change)
Chapter 13 – Individual Wage Earner
The purpose of a chapter 13 bankruptcy is to allow an individual debtor with a regular income pay back debts using their income and enabling a debtor to keep certain assets. A person who operates a small business as a sole proprietor may also file under this chapter.
Under a chapter 13 bankruptcy filing, the debtor must promptly file a repayment plan and obtain the court’s approval of the plan. Any creditor may object to the plan. The debtor, along with the appointed trustee, must work out any objections to the plan before the court will approve it. The typical repayment period of a chapter 13 is 3 to 5 years. The debtor makes regular payments to the trustee and the trustee distributes these monies to creditors according to the terms of the
plan.
After completion of the plan, the debtor’s debts are discharged (with some exceptions) and the debtor is no longer obligated to pay
them.
Court filing fee: $274.00 (price subject to change)
Common Bankruptcy Definitions
- Bankruptcy - A legal proceeding in federal court in which an individual or company may be released (or "discharged") from all or a portion of their debts.
- Debtor - The person or company filing bankruptcy.
- Trustee - A person who administers a debtor's estate. A trustee is always appointed in a chapter 7, 13, or 12 bankruptcy. A trustee may be appointed in a chapter 11 case.
- Creditor - The people or companies to whom a debtor owes money or property. Creditors have claims against the debtor.
- Proof of Claim - A proof of claim is a written statement filed with the court describing the debt that a creditor claims the debtor may owe them.
For a free consultation, call (517) 347-6700
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