What are the different Types of Bankruptcy?

bankruptcyIf you’re thinking about filing for bankruptcy, you may be wondering about the different types of bankruptcy under United States law. There are 5 distinct types of bankruptcy according to U.S. Bankruptcy Code. Following is a short description of each of these 5 types.

Chapter 7

The most commonly used type of bankruptcy in the U.S., Chapter 7 is filed by businesses and individuals that are not able to pay back money owed to their creditors. In the case of a business, a trustee is appointed and the business ceases operations. The trustee sells off the business’s assets until all the creditors can be paid back, at which time the business can re-start operations if it is able.

Individuals go through a similar process, with a trustee selling off the individual’s non-protected assets. Some debts may be discharged (i.e. cancelled), although some (including student loans and child support) cannot be discharged.

Chapter 9

The Chapter 9 type of bankruptcy is the type that applies to municipalities, including cities, towns, and villages. These allow municipalities to use collective bargaining agreements to lessen their debts through re-negotiation with their creditors.

Chapter 11

This type of bankruptcy allows for reorganization, and while it can apply to individuals, corporations and other types of businesses most often use it. Individuals who possess more than $400,000 in assets can file for Chapter 11.

All Chapter 11 cases are heard in court, and a plan is made to pay off creditors as much as possible. In some cases, this may leave the individual or business filing with no remaining assets.

Chapter 12

Chapter 12 of the U.S. Bankruptcy Code expands bankruptcy protections to those who aren’t traditional wage earners. Those covered by this statute include fisherman and farmers.
Chapter 13

Like Chapter 11, this type of bankruptcy protection allows for reorganization, often related to mortgages and other personal debt belonging to individuals. To be eligible to file for Chapter 13, the individual must have unsecured debts that total less than $383,175.

Contact Ursulova Law Offices to talk to a Brooklyn bankruptcy attorney about your case today. Your bankruptcy lawyer in Brooklyn can answer your questions and help you understand which of these types of bankruptcy, if any, are right for you.

Ursulova Law offices, P.C.

Contact Ursulova Law Offices, P.C. to find out how our NY Bankruptcy Attorneys can help you today. Our offices are located in New York, Brighton Beach, Brooklyn and Garden City.


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