Do you know about - Bankruptcy Chapters Explained
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The inherent lesson 7 debtor should understand that a right bankruptcy case does not involve the filing of a plan of reimbursement as in lesson 13, but rather envisions the bankruptcy trustee's gathering and sale of the debtor's nonexempt assets, from which holders of claims (creditors) will receive distributions in accordance with the provisions of the Bankruptcy Code. Part of the debtor's asset may be field to liens and mortgages that pledge the asset to other creditors. In addition, under lesson 7, the individual debtor is permitted to withhold unavoidable "exempt" property. The debtor's remaining assets are liquidated by a trustee. Accordingly, inherent debtors should comprehend that the filing of a petition under lesson 7 may result in the loss of property.
In order to qualify for relief under lesson 7 of the Bankruptcy Code, the debtor must be an individual, a partnership, or a corporation. 11 U.S.C. §§ 109(b); 101(41). Relief is available under lesson 7 irrespective of the estimate of the debtor's debts or either the debtor is solvent or insolvent. An individual cannot file under lesson 7 or any other chapter, however, if while the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or the debtor voluntarily dismissed the old case after creditors sought relief from the bankruptcy court to recover asset upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e).
One of the former purposes of bankruptcy is to extraction unavoidable debts to give an honest individual debtor a "fresh start." The extraction has the result of extinguishing the debtor's personal liability on dischargeable debts. In a lesson 7 case, however, a extraction is available to individual debtors only, not to partnerships or corporations. 11 U.S.C. § 727(a)(1). Although the filing of an individual lesson 7 petition usually results in a extraction of debts, an individual's right to a extraction is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy extraction does not extinguish a lien on property.
Chapter 11
A case filed under lesson 11 of the United States Bankruptcy Code is frequently referred to as a "reorganization" bankruptcy.
How lesson 11 Works
A bankruptcy case commences when a bankruptcy petition is filed with the bankruptcy court. Fed. R. Bankr. P. 1002. A petition may be a voluntary petition, which is filed by the debtor, or it may be an involuntary petition, which is filed by creditors that meet unavoidable requirements. 11 U.S.C. §§ 301, 303. A voluntary petition should cleave to the format of Form 1 of the official Forms prescribed by the Judicial conference of the United States. The official Forms may be purchased at legal writing materials market or download from the internet at http://www.uscourts.gov. The voluntary petition will comprise suitable data about the debtor's name(s), communal security estimate or tax identification number, residence, location of requisite assets (if a business), the debtor's plan or intention to file a plan, and a ask for relief under the suitable lesson of the Bankruptcy Code. In addition, the voluntary petition will indicate either the debtor qualifies as a small firm as defined in 11 U.S.C. § 101(51C) and either the debtor elects to be determined a small firm under 11 U.S.C. § 1121(e).
Upon the filing of a voluntary petition for relief under lesson 11 or, in an involuntary case, the entry of an order for such relief, the debtor automatically assumes an further identity as the "debtor in possession." 11 U.S.C. § 1101. The term refers to a debtor that keeps rights and operate of its assets while undergoing a reorganization under lesson 11, without the appointment of a case trustee. A debtor will remain a debtor in rights until the debtor's plan of reorganization is confirmed, the debtor's case is dismissed or converted to lesson 7, or a lesson 11 trustee is appointed. The appointment or determination of a trustee occurs only in a small estimate of cases. Generally, the debtor, as "debtor in possession," operates the firm and performs many of the functions that a trustee performs in cases under other chapters. 11 U.S.C. § 1107(a).
A written disclosure statement and a plan of reorganization must be filed with the court. 11 U.S.C. § 1121. The disclosure statement is a document that must comprise data about the assets, liabilities, and firm affairs of the debtor sufficient to enable a creditor to make an informed judgment about the debtor's plan of reorganization. 11 U.S.C. § 1125. The data required is governed by judicial discretion and the circumstances of the case. The contents of the plan must comprise a classification of claims and must specify how each class of claims will be treated under the plan. 11 U.S.C. § 1123. Creditors whose claims are "impaired," i.e., those whose contractual rights are to be modified or who will be paid less than the full value of their claims under the plan, vote on the plan by ballot. 11 U.S.C. § 1126. After the disclosure statement is popular ,favorite and the ballots are collected and tallied, the bankruptcy court will show the way a confirmation hearing to resolve either to confirm the plan. 11 U.S.C. § 1128.
Chapter 12
In tailoring lesson 12 to meet the economic realities of family farming, this law has eliminated many of the barriers that family farmers had faced when seeking to reorganize successfully under either lesson 11 or 13 of the Bankruptcy Code. For example, lesson 12 is more streamlined, less complicated, and less high-priced than lesson 11, which is better grand to the large corporate reorganization. In addition, few family farmers find lesson 13 to be advantageous, because it was designed for wage earners who have smaller debts than those facing family farmers. In lesson 12, Congress sought to integrate the features of the Bankruptcy Code which can furnish a framework for victorious family farm reorganizations. At the time of the enactment of lesson 12, Congress could not be sure either lesson 12 relief for the family farmer would be required indefinitely. Accordingly, the law (which first provided that no lesson 12 cases could be filed after September 30, 1993) currently provides that no cases may be filed under lesson 12 after July 1, 2000.
The Bankruptcy Code provides that only a family farmer with "regular yearly income" may file a petition for relief under lesson 12. 11 U.S.C. §§ 101(18), 109(f). The purpose of this requirement is to ensure that the debtor's yearly income is sufficiently carport and quarterly to permit the debtor to make payments under a lesson 12 plan. Discount is made under lesson 12, however, for situations in which family farmers may have income that is seasonal in nature. Relief under this lesson is voluntary; thus, only the debtor may file a petition under lesson 12.
Chapter 13
Chapter 13 is designed for individuals with quarterly income who desire to pay their debts but are currently unable to do so. The purpose of lesson 13 is to enable financially distressed individual debtors, under court supervision and protection, to recommend and carry out a reimbursement plan under which creditors are paid over an extended duration of time. Under this chapter, debtors are permitted to repay creditors, in full or in part, in installments over a three-year period, while which time creditors are prohibited from starting or persisting variety efforts. A plan providing for payments over more than three years must be "for cause" and be popular ,favorite by the court. In no case may a plan furnish for payments over a duration longer than five years. 11 U.S.C. § 1322(d).
Any individual, even if self-employed or operating an unincorporated business, is eligible for lesson 13 relief as long as the individual's unsecured debts are less than 9,250 and secured debts are less than 7,750. 11 U.S.C. § 109(e). A corporation or partnership may not be a lesson 13 debtor. Id.
An individual cannot file under lesson 13 or any other lesson if, while the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover asset upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e).
For more information, please visit www.mybankruptcycounseling.com
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