Bankruptcy

Tough economic times plague American business owners and individuals alike. In 2006 alone, there were 1.2 million personal and business filings for bankruptcy according to the United States’ Courts Administrative Office. Of these fillings, fifty-one percent of the bankruptcy filings were for individuals, and the remaining forty-nine percent came from businesses. The numbers are staggering. If you are facing bankruptcy, you are obviously not alone. Help is available. The American government gives debtors a chance for a fresh start. You can take advantage of this too. Bankruptcy filing is your chance to a new financial future. The four most common chapters for filing bankruptcy are chapters seven, eleven, twelve, or thirteen.

The following contains a brief explanation about each of these bankruptcy options.

• Chapter Seven- Liquidation of Debts under the Bankruptcy Code: Chapter seven bankruptcy claims are the most frequently chosen method of declaring bankruptcy. All companies, partnerships, and individuals may file for chapter seven bankruptcy relief. For individuals exclusively, a chapter seven bankruptcy allows the discharge of most debts. This allows debtors a new financial freedom. Discharge of some debts, however, cannot occur. These non-dischargeable debts include property liens and automotive loans. For companies, organizations, or partnerships, the discharge of debts is not allowed under chapter seven bankruptcy rules.
• Chapter Eleven- Reorganization through Bankruptcy Code: This form bankruptcy is known as reorganization declarations. If an individual, business, or partnership files for chapter eleven bankruptcy, a proposed plan of reorganization is offered to creditors. Individuals clearing debts rarely choose this path. The proposed plan allows businesses to remain operational in the face of financial adversity. The decision to file chapter eleven voluntarily usually stems from pressure from creditors. Creditors file involuntary chapter eleven filings under some circumstances. After a chapter eleven, a debtor becomes a "debtor in possession," meaning the debtor remains in control of their liabilities and assets and is reorganizing.
• Chapter Twelve- Family Fisherman or Farmer Bankruptcy: This form of bankruptcy allows special debt adjustment for anglers and farmers. For married couples filing jointly or separately, debt information from both parties is necessary. Trustees take over the case when couples apply for chapter twelve relief. These trustees evaluate and collect debt payments from debtors to give to their creditors.
• Chapter Thirteen- Individual Debts Maneuvering: For wage earning persons, this form of bankruptcy allows property retention while debts are periodically paid off to creditors. For this to occur, courts, creditors, and trustees review the financial situation of clients and their spouse to assess the nature of the debts owed.