This may be news to some but there are 6 types of bankruptcy chapters. Not all apply to the average individual, but this information may be of interest to you now or sometime down the road.
Under the Federal Bankruptcy Code, there are actually 6 types of bankruptcy. Below you will find each type of bankruptcy and see what each means.
Here are the six bankruptcy codes:
Chapter 7 - most people and/or businesses file chapter 7 for total liquidation of all eligible debts
Chapter 9 - when a municipality files bankruptcy
Chapter 11 - is filed when a business or sometimes an individual who wants to reorganize their debt
Chapter 12 - is for family farmers and family fisherman
Chapter 13 - is for individuals who wish to reorganize their debt with a repayment plan
Chapter 15 - is regarding international cases
The most popular bankruptcy filing is Chapter 7. This allows the individual to delete most of their debt. Chapter 7 bankruptcy usually takes 3 months. If filing a Chapter 7 bankruptcy please note it will reflect on their credit score for 10 years. Also, Chapter 7 bankruptcy does not mean all debt will be discharged. Things like child support, most student loans, and any taxes (federal, state and local) owed will need to be paid by you.
Most people know nothing of Chapter 9 bankruptcy. Chapter 9 bankruptcy calls for the resolution of municipal debts. Only a handful of municipalities have ever filed Chapter 9 since it was first made into law in 1937. In 1994, Orange County, California filed a multi-million dollar Chapter 9 because the County Treasurer-Tax Collector misappropriated the county's tax dollars. He left the entire county bankrupt and ended up in jail. This case personally affected me as I lived there and worked with the County of Orange at the time.
Chapter 11 bankruptcy is filed when a business needs to reorganize their debt. The business makes a plan to repay their debt in order to stay in business.
Chapter 12 bankruptcy is intended for family farmers and family fisherman who have normal income but high debt. Usually this type of bankruptcy allows these families to suggest a plan to repay all or part of their debt.
Chapter 13 bankruptcy is for individuals who wish to reorganize their debt with a repayment plan. Chapter 13 demonstrates you're taking responsibility for some of your debt, therefore your credit score will be affected for 7 years instead of 10 years under Chapter 7.
Chapter 15 is basically a new chapter added in 2005 when Federal Bankruptcy Laws were changed. It involves methods for dealing with cases involving debtor issues for international cases.
The 6 types of bankruptcy chapters will not involve most people. Federal Law has over the years taken into account all types of circumstances so most people and corporations have the opportunity to alter and/or relieve their debt problems. If you fall into one of the 6 types of bankruptcy, please consider all you options before making anything permanent.
About the Author:
Hi! My name is April. I've worked as a Bankruptcy Paralegal for several years. I have written this article Bankruptcy Chapters - Learn All 6 Bankruptcy Chapters to enlighten you about bankruptcy. Please visit my website,
www.savemoneysavetimenow.com
No. of Times this article has been viewed :
628
Date Published :
Oct 11 2009