What are the different bankruptcy chapters and can you explain them?
What Are the Different Bankruptcy Chapters?
There are several different types of bankruptcy. Chapter 7 is the most common, but there are others, including Chapter 15 and liquidation. If you are considering filing for bankruptcy, you should know what each chapter entails. Chapter 7 is a personal bankruptcy that requires you to give creditors a copy of your financial statements.
Chapter 15 bankruptcy
Chapter 15 bankruptcy is a part of Title 11 of the United States Code and deals with jurisdiction in certain bankruptcy cases. It enables corporations based outside of the United States to file for bankruptcy in U.S. courts. In many cases, Chapter 15 can make the process much simpler, but it's important to know the facts before filing. If you're unfamiliar with the law, read on to learn about some of the details.
Cross-border bankruptcy cases involving foreign businesses are expected to increase by about a third by 2021, and they're on track for a record-breaking year. In these instances, foreign debtors are increasingly turning to chapter 15 bankruptcy to enjoin creditors from taking actions against their assets in the U.S. until their foreign bankruptcy case is finished. They're also using it to enforce foreign court plans and orders, avoid preferential transfers, and seek discovery from U.S. parties.
Liquidation chapter
Liquidation bankruptcy, also known as chapter 7 bankruptcy, is an option for people who want to wipe out some of their debt. This chapter of bankruptcy can also help a debtor regain a fresh financial start. In this type of bankruptcy, a trustee will take inventory of the debtor's assets and determine which assets will be liquidated. The liquidated assets will then be distributed to creditors. Identifying which assets qualify for liquidation can be difficult.
The liquidation chapter of bankruptcy is designed for individuals who are unable to afford to pay back their debts in full. While a Chapter 7 bankruptcy is designed to help low-income filers, those who make a substantial income should consider a Chapter 13 reorganization bankruptcy instead. Chapter 13 is a much more flexible option for income earners and allows them to pay their creditors over time.
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