Chapter 7 is a form of bankruptcy applicable to both individuals and businesses. It provides immediate debt relief to the debtor, halting all efforts by the creditor to collect the debt following the filing of a petition, a """"means test,"""" and all the required information regarding the debtor's assets and income. In certain instances, all bankruptcy-related filing expenses can be amortized over a period of up to six months. This option typically allows for the discharge of a debtor's loan, while also permitting the liquidation of non-exempt estate assets in order to maximize the financial institution's return. Despite providing a chance for individuals to restart their financial affairs by eliminating a substantial portion of their debts, this option is typically unavailable to partnerships and corporations.
Chapter 13 provides various assistance, as well as relief from creditors' measures, to debtors with sufficient income to make significant debt reductions. A fiduciary appointed by the court will require a debtor to develop a plan for debt repayment within three to five years. After completion, this must be presented to the court. Regarding assent, the program must comply with the Bankruptcy Codes, accommodate secured creditors, and keep consumer debt within predetermined limits. The fact that Chapter 13 is not a liquidation method means that the consumer would not lose any property.
Chapter 12 is comparable to Chapter 13, but is specifically tailored to farmers and fishermen, as well as the management of the high levels of debt associated with their businesses. This program enables the enterprise to continue operations. Similar to Chapter 13, a court-appointed trustee considers the consumer's regular income and assists in the development of a three- to five-year repayment plan.
Chapter 11 is an additional bankruptcy option involving the development of a reorganization plan. Chapter 11 is more appropriate for businesses than for individuals, as it can be a lengthy and expensive process. Although creditors have the ability to evaluate the debtor's circumstances and proposed reorganization, similar to Chapter 13, the court has jurisdiction over the approval or rejection of the reorganization strategy. This option enables the debtor to make modifications to the business to allow trading to continue through a combination of payments and discharges in accordance with the reorganization strategy.
Chapter 9 is utilized for municipalities in financial distress.
Chapter 15 is utilized whenever a bankruptcy involves additional countries in addition to the United States.
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