Bankruptcy refers to the legal status of a person or business that cannot repay the debts owed to creditors. The Bankruptcy process is normally initiated by the debtor, however formal Bankruptcy proceedings do not begin until there is an official court order by a United States Bankruptcy Court. Generally, Bankruptcy relieves the debtor from their debt by either discharging the debt or restructuring the debt.
Common types of bankruptcy include:
Chapter 7. This is basic liquidation of debt for individuals and businesses. It is the fastest and least complex form of bankruptcy.
Chapter 9. This is municipal bankruptcy. Only towns, cities, etc., can apply for this.
Chapter 11. This is a reorganization or rehabilitation of debt which typically allows companies, or individuals with substantial assets, to continue operations while they follow a debt repayment plan.
Chapter 12. Rehabilitation of debt for family farmers and fishermen.
Chapter 13. Rehabilitation allows individuals with a regular source of income to develop a plan to repay all or part of their debts.
Chapter 15. International Bankruptcy - this helps foreign debtors to clear their debt.
Changes may occur in this area of law. The information provided is brought to you as a public service, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or substitute for the advice of a lawyer.
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