What are the basics about Bankruptcy?
This page describes what are the basics about Bankruptcy. Bankruptcy is the process in which consumers and business can eliminate or repay some or all of their debts under the protection of the federal bankruptcy court. Congress enacted the Bankruptcy Code in 1978. The Bankruptcy Code, which is codified as title 11 of the United States Code is the uniform federal law that governs all bankruptcy cases.
People file for bankruptcy for a variety of reasons: Job loss, followed by an inability to find work that pays nearly as well, medical expenses that are not reimbursed by insurance or government programs, divorce or legal separation, small business failures and the foreclosure crisis.
There are six basic types of bankruptcy cases under the Bankruptcy Code. The cases are traditionally given the names of the chapters that describe them. Depending on your circumstances, the Law Office of Rami N. Nabi will determine which Chapter is right for you.
1. Chapter 7 Bankruptcy:
Entitled Liquidation: is a court supervised procedure by which a trustee takes over the assets of the debtor’s estate, reduces them to cash and makes distributions to creditors. However debtors have the right to retain exempt property. Because there is usually little or no nonexempt property in most Chapter 7 cases, there may not be an actual liquidation and the debtor is able to keep all personal property. (Read more about Chapter 7 Bankruptcy)
2. Chapter 13 Bankruptcy:
Entitled Adjustment of Debts of Individual with Regular Income or commonly known as the “Repayment Plan”. Chapter 13 allows you to keep valuable assets, such as your house because it allows the debtor to propose a plan to repay creditors over time, usually three or five years. Chapter 13 is also available for debtors that do not qualify for Chapter 7 relief under the means test. (Read more about Chapter 13 Bankruptcy)
3. Chapter 11 Bankruptcy:
Entitled Reorganization, ordinarily is used by commercial enterprises that desire to continue to operate business and repay creditors through a court approved plan of reorganization.
4. Chapter 12 Bankruptcy:
Entitled Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income. Provides debt relief to family farmers and fishermen with regular income.
5. Chapter 9 Bankruptcy:
Entitled Adjustment of Debts of a Municipality. Provides essentially for reorganization for a municipality.
6. Chapter 15 Bankruptcy:
Entitled Ancillary and Other Cross-Border Cases. Provide an effective mechanism for dealing with cases of cross border insolvency.
The Law Offices of Rami N. Nabi offers a Free Initial Consultation