There are three primary forms of personal and commercial bankruptcy. Chapter 7 bankruptcy is a form of liquidation available only to individuals. Chapter 11 is a form of reorganization bankruptcy that is most frequently utilized by businesses, but is also occasionally utilized by individuals. Chapter 13 is the most prevalent form of personal bankruptcy reorganization. It is unavailable to companies.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most prevalent form of insolvency filing by individuals. Chapter 7 essentially wipes the slate clear, allowing the individual, married couple, or married individual filing separately to start over. It is known as a liquidation method of debt discharge, but in the majority of cases, the filer is permitted to keep all personal property. In some instances, the filer can exclude debts for a mortgage or auto loan so that he can keep these items and continue making payments on the debts.
Typically, the ""fresh start"" only pertains to consumer or medical debt. Federal student loans and most delinquent tax situations cannot be discharged through bankruptcy. How clean the slate is depends primarily on the categories of debt the bankruptcy filer carries. In the majority of cases, Chapter 7 bankruptcy can be concluded within four to six months. It stays on the credit report for ten years, and the filer cannot file again for Chapter 7 for at least eight years.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is extremely uncommon for individuals, but it is the most prevalent form of bankruptcy for businesses. In contrast to Chapter 7, the purpose of Chapter 11 bankruptcy is to reorganize the filer's debts so that they can be paid. Additionally, Chapter 11 permits the company to continue operations during the reorganization period. Neither creditors nor the bankruptcy trustee may seize property from a debtor who has filed for Chapter 11 protection. Thus, the company retains both the ability to resume operations and the necessary tools to do so.
Chapter 11 is also available to individuals, but it is uncommon for individuals to file under this chapter. When individuals petition under Chapter 11, it is typically because their debts exceed the Chapter 13 limitations.
Regardless of whether the Chapter 11 petitioner is a business or an individual, the insolvent must propose a debt repayment plan that typically includes significant concessions from creditors. Creditors vote on whether they will approve the proposals of the debtor. The bankruptcy court mandates a plan in which the creditors have had input, binding both the creditors and the debtor to the terms of the plan.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is often referred to as the wage-earner's bankruptcy because the individual petitioning for Chapter 13 bankruptcy must have a regular, disposable income. The applicant must also have unsecured debts of less than $336,900 and secured debts of less than $1,010,650. The bankruptcy court determines how much the debtor can afford to repay each month and organizes creditors into a payment hierarchy. The duration of repayment plans ranges from three to five years. Creditors may receive between zero and one hundred percent of what the debtor owes them, but neither creditors nor the bankruptcy trustee may seize the debtor's property. Additionally, a Chapter 13 bankruptcy can remain on a debtor's credit report for up to ten years.
" - https://www.affordablecebu.com/
