Filing for Bankruptcy

The type of Bankruptcy filed will depend on the individual circumstances involved. Listed below are the various bankruptcy types:

Chapter 7 Bankruptcy: Liquidation

Reference article: Chapter 7, Title 11, United States Code

This is the most common form of bankruptcy and will involve the appointment of a trustee who will have the responsibility of collecting non-exempt property from the debtor, sell that property and use those funds in order to pay creditors. Each state will allow essential property belonging to the debtor to be exempt from this process. Because of this, most Chapter 7 filings are “no asset” cases in which the debtor will keep all of their property.

Chapter 9: Reorganization for municipalities

Reference article: Chapter 9, Title 11, United States Code

Chapter 9 bankruptcies are only available to municipalities. This type of bankruptcy is not a form of liquidation – but rather, a form of reorganization. An entire county, for example, may file for a Chapter 9 bankruptcy.

Chapters 11, 12, and 13: Reorganizations

Reference articles: Chapter 11, Title 11, United States Code, Chapter 12, Title 11, United States Code and Chapter 13, Title 11, United States code

Bankruptcies filed under Chapter 11, Chapter 12 or Chapter 13 consist of complex reorganizations which involve allowing the debtor to keep all or some of their property to facilitate future earnings that can be used to pay off creditors.

Consumers will commonly file a Chapter 7 or a Chapter 13 – filing a Chapter 11 is rare (but allowed). Similar to a Chapter 13, a Chapter 12 is only available to “family farmers” and “family fishermen” in certain circumstances. The difference is that a Chapter 12 will usually have more lenient terms for debtors than a similar Chapter 13. Chapter 12 was set to expire in 2004 – but was renewed and established permanently.

Chapter 15: Cross-border insolvency

Reference article: Chapter 15, Title 11, United States Code:

Chapter 15 was added to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This deals with foreign companies with debts originating in the United States.

Please note that this article is for informational purposes only and is not intended as legal advice.

The Jodat Law Group, PA which is located in Sarasota, Florida, can help you through your bankruptcy claim. Gary R. Jodat is the managing attorney.


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