It is unknown to most of the population that there are actually five unique types of bankruptcy under the United States Federal Law. There are some specific to businesses, individuals, and many other entities. Individuals usually file for individual reorganization bankruptcy (also known as chapter 13 bankruptcy) or liquidation bankruptcy (also known as chapter 7 bankruptcy). However, there are several other kinds of bankruptcy that are not available to the general public. If you are considering filing for chapter 7 or chapter 13 bankruptcy, it is advised that you first contact a bankruptcy attorney to further assist you.
- Liquidation is among the most frequently filed bankruptcies. Because it is mostly an individualistic bankruptcy, it is occasional to see department or clothing stores filing for it. If you ever find yourself owing more to a lender or creditor than you can afford or earn in the near future, you should definitely consider filing for chapter 7 bankruptcy. Any of your assets that have high value can be used and liquidated to pay all or some of your debt. Once this process of using your assets to pay off debt begins, your bankruptcy case will be dismissed and you can start fresh.
- Chapter 9 bankruptcy, known as adjustments of debts of a municipality bankruptcy applies only to towns, cities, and counties. The municipality must not have debt it cannot pay off and be given permission by state law in order to file. They must also want to adjust its debts so that bankruptcy will not occur in the future. An example of Chapter 9 bankruptcy is Detroit in 2013.
- Business reorganization, Chapter 11 bankruptcy is typically used by corporations that cannot budget correctly and fall victim to financial struggles.
- Individual reorganization, or chapter 13 bankruptcy is much like business reorganization bankruptcy, but for individuals facing financial problems. In order to file for this, however, you must have a reliable and steady flow of income. Your money is then organized into a concise plan that will allow you to pay back your lenders and banks over a few years without having to liquidate your assets.
- Chapter 15 bankruptcy, or cross border case bankruptcy is used as an ancillary case to international corporations facing bankruptcy. Cross border case bankruptcy allows foreign corporations bankruptcy cases to access to the U.S. Bankruptcy Courts. While not usually drastic, the rules and types of bankruptcies do change from year to year. If a certain type of bankruptcy is ruled to be outdated, it will be deleted. However, the chapter number of the other bankruptcies does not change.
- Chapter 12 bankruptcy, or adjustment of debts of a family farmer or fisherman bankruptcy is for individuals who are strictly fishermen or family farmers.
Contact a Bankruptcy Attorney today.
An ethical bankruptcy attorney will let you know if bankruptcy is truly the best option for you. If it is not he or she should be willing to suggest alternate options, such as debt management or debt resolution. Filing for bankruptcy is an important decision and should not be taken lightly. Visiting with several qualified bankruptcy lawyers is a crucial part of the bankruptcy process. A skilled and reputable lawyer can help you file the paperwork, get creditors off your back and speed up the entire process. Do not wait to hire legal representation for your bankruptcy. Call a skilled bankruptcy lawyer Phoenix, AZ trusts today to schedule a consultation. Many bankruptcy lawyers offer free initial consultations, so you do not have anything to lose by speaking to one.
Thank you to our contributors at Kamper Estrada, LLP for the above information.