Proceedings of Bankruptcy

There are two types of bankruptcy proceedings on which the bankruptcy attorneys work. The first one is the liquidation process under the Chapter-7 Bankruptcy and the second one is a court approved plan of repayment of debt under Chapter-9, Chapter-11, Chapter-12, Chapter-13. Here is how a debtor can file for his bankruptcy:

Chapter-7(Straight Bankruptcy): It is a liquidation processing of bankruptcy. In this scenario, a debtor may change all his non-exempt assets to the trustees of bankruptcy such as the cash of the debtor’s savings account, his car, any other valuable assets. Then they converts it into cash and distribute among the creditors. Once the proceedings are over, the debtor receives a discharge notice from the court. And then he becomes free from all the debts.

Chapter-9(Adjustment of Debts for a Municipality): It was passed by Congress near about sixty years ago. It is a resolution of municipal by the federal mechanism. It is very similar to Chapter-11. But it is available to the municipalities only. And this includes counties, villages, municipal utilities, taxing districts, schools and as well as towns and cities.

Chapter-11(Reorganization): Under this chapter only commercial companies or their lawyers file for the bankruptcy. In this scenario, the companies are allowed to continue with their business while they are repaying their creditors according to the court approved plan.

Chapter-12(Adjustment of Debts of a Family Farmer with Regular Annual Income): This debt relief facility is for the farmers. this one is almost similar to Chapter-13 where courts allow them to repay their debt in a certain period, up to three years. It may be extended up to five years if court allow.

Chapter-13(Adjustment of Debts of an Individual with Regular Annual Income): This debt relief facility is for the individuals, specially for those who do not qualify for Chapter-7 Bankruptcy filing. This one is quite different from the Chapter-7. Under this category, the debtors do not need to sell their valuable property to repay their debt. Rather court approve a certain period of time for them to repay their debt. The period of time can be up to three years. It can be extended up to five years with a special permission from the court. The Attorneys go through the financial condition of the debtor such as his monthly income, his financial condition etc. then they set a monthly amount to repay the debt.