Question

First, define bankruptcy chapters 7, 11 & 13.

Second, discuss who can file these chapters of bankruptcy, what the eligibility requirements are, and what happens to the filer's debt upon discharge.

Answer 1

Bankruptcy chapter 7- This type of bankruptcy can be filed by individual, partnership or corporation. This is called a straight bankruptcy, in this type of bankruptcy, most of the debtors can repay the unsecured debt (credit card, personal loan) by surrendering the assets. In this bankruptcy, a trustee is appointed by the court who sells your assets to pay back to the creditors. The bankruptcy form should include list of all creditors and amount owed to them. A meeting of all creditors takes place within 40 days following the petition. When bankruptcy 7 is filed, creditors cannot initiate a lawsuit or call and demand repayments from the debtor.

At the end of the bankruptcy proceedings, debtor will receive a discharge release that takes away any personal liability.

Bankruptcy chapter 11- This type of Bankruptcy keeps the business alive and active while being able to pay to the creditors. Company will file the petition first that may be voluntary or involuntary. Voluntary petition is filed by debtor and involuntary petition is filed by creditors. Debtor is given four months time to come up with his reorganization plans. In this Bankruptcy, your business can be continued while paying the debt. Companies file for bankruptcy chapter 11 so as to discharge of debts.

Bankruptcy chapter 13- This type of bankruptcy is filed when debtor cannot pay all his debts but some. This bankruptcy is filed to eliminate the debts. It creates a plan to repay some or all debt within three to five years. In this bankruptcy, debtor pays to trustee on monthly basis and trustee distributes the proceedings to the creditors.

If a company or individual faces trouble in paying unsecured debt, for example; medical bills, credit card, car and home loan then bankruptcy chapter 13 suits best to you. During bankruptcy 13, you should make sure that you are making payment of mortgage. In this bankruptcy, debtor can protect his property while allowing him the time to repay his debts within the monthly payment plan.