Chapter 7 bankruptcy
Chapter 7 bankruptcy, also known as liquidation, is the fastest and most commonly used type of bankruptcy. It is best for those who have unsecured debt such as personal loans, credit cards, or medical bills.
WHO CAN FILE FOR CHAPTER 7 BANKRUPTCY?
You will not be allowed to use Chapter 7 bankruptcy if you have already been released from bankruptcy in the last six or eight years (depending on the type of bankruptcy you filed) or if, on the basis of your revenue, expenditures and debt burden, you may successfully complete a Chapter 13 repayment plan.
HOW TO FILE FOR CHAPTER 7 BANKRUPTCY?
In order to file for Chapter 7 bankruptcy, you must fill out a petition and a number of other forms within your area’s bankruptcy court. In general, the forms ask you to describe:
- your home,
- your current income and your monthly living expenses,
- your debt property, which you claim by statute, allows you to stay in bankruptcy by Chapter 7 (called “exempt property”)–most states allow you to keep some equity in your home, clothing, household furnishings,
- social security payments you haven’t spent,
- other necessities such as a car and trading tools that you owned and spent over the past two years, and,
- property that you sold or gave away during the previous two years.
WHAT HAPPENS AT THE END OF THE CHAPTER 7 BANKTUPTCY PROCESS?
Most states will allow you to keep some equity in your home, clothing, household furnishings, social security payments you haven’t spent, and other necessities such as a car and trading tools that you owned and spent over the past two years, and property that you sold or gave away during the previous two years.
Chapter 11 bankruptcy should read as such:
Chapter 11 bankruptcy Is designed to enable companies struggling to restructure their finances and maximize their creditors and owners ‘ returns.
HOW DOES CHAPTER 11 BANKRUPTCY BEGIN AND WHO CAN BE A DEBTOR?
Chapter 11 bankruptcy begins by filing a petition in the bankruptcy court. The cases are generally voluntary. It is the debtor who takes the initiative in a voluntary Chapter 11 situation, which seeks protection from bankruptcy. Occasionally though, creditors will band together against a defaulting debtor to file an involuntary Chapter 11 lawsuit.
Many debtors file Chapter 11 where they have their principal place of business. Business debtors can also file bankruptcy where they are “domiciled”-that is, incorporated or otherwise structured. For example, businesses incorporated in Delaware often file bankruptcy there rather than their home states.
WHAT MUST THE BANKRUPTCY COURT APPROVE?
Even though the debtor may continue business after it files Chapter 11, it loses authority in major decision making to the bankruptcy court. With that, the bankruptcy must also approve the following:
-Any sale of assets, such as property or immovable property (with the exception of items such as inventories sold by a retail debtor in the ordinary course of business)
-entering into or breaking the lease of real or personal property mortgages or other secured financing arrangements that enable the debtor to borrow money after the case has been closed or expanded.
– Contracting or amending union, distributor, insurance, and other contracts and agreements,
– Maintaining and paying fees and expenses to, attorneys and other practitioners.
WHAT HAPPENS AT THE END OF THE CHAPTER 11 BANKRUPTCY PROCESS?
The bankruptcy court agrees that the proposal is viable and formulated in good faith once the creditors have approved a reorganization plan (either the company’s plan, or a rival plan). Confirmation of the agreement removes the business from its old debts, but the company is bound by the plan to make payments to its creditors.