What is a Chapter 7? What is a Chapter 11? What is a Chapter 12? What is a Chapter 13?

What is a Chapter 7? What is a Chapter 11? What is a Chapter 12? What is a Chapter 13?

What is a Chapter 7?

Chapter 7 is the most popular type of bankruptcy. In a Chapter 7 bankruptcy, you must fully disclose your property, debts and financial activities over the several years prior to the filing of the bankruptcy.  Typically three months after the case is filed, you receive a discharge of most of your debts with exception of certain nondischargeable debts.

What is a Chapter 13?

Chapter 13 is a reorganization for individuals. The individual can include sole proprietors and independent contracts but cannot include entities such as corporations or limited liability companies. Along with all of the documents required in a Chapter 7, you also propose a 3 or 5 year plan under which you typically must repay certain types of debts in full and usually some portion of your unsecured debt. Chapter 13 can be used to pay off missed mortgage payments over the life of the plan. Typically Chapter 13 is not the bankruptcy of choice because of the length of time before receiving a discharge and the extra legal fees involved. However, 10% to 15% of people who file under Chapter 7 are required to convert to a Chapter 13 bankruptcy because they have sufficient income to fund a Chapter 13 plan and at least partially pay back some of their creditors.    

What is a Chapter 11?

                A Chapter 11 Bankruptcy is typically for financially struggling businesses; used as a reorganization of their financial affairs. However, individuals may also qualify to file a Chapter 11. Individuals who consider Chapter 11 usually have debts in excess of the Chapter 13 bankruptcy debt limits or if the Debtor has substantial non exempt assets.  Chapter 11 fees can be cost prohibitive and are very complicated. You definitely need an attorney if you are going to file a Chapter 11. If you are considering filing a Chapter 11, contact an attorney that specializes in Chapter 11 bankruptcies.

What is a Chapter 12?

Chapter 12 is very similar to Chapter 13. However, you be eligible for Chapter 12, at least 80% of the debts must have arisen from the operation of a family farm. If you believe that Chapter 12 may be what you need, contact an attorney that specializes in Chapter 12 bankruptcies.

 If you are considering any type of bankruptcy, contact a bankruptcy attorney today.