The Types Of Bankruptcies In The US

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					The Types Of Bankruptcies In The US

A debt, regardless of its nature, must be paid as it's an obligation of each and every
individual, as well as businesses. However in an instance where a person in debt cannot
pay off their debts they have accrued, they must have an alternative to restructure their
debt to keep afloat.

Fortunately, the US government can provide ease to debtors who are troubled by too
much financial debts. The debtors shall be provided a chance to discharge the money they
owe without worrying about debt collector persecution or legal action. The bankruptcy
laws may save a debtor from losing their properties.

Declaring bankruptcy, though, is not going to keep an individual from being prosecuted
for felony or stop any tax claims. Financial obligations just like student loans and child
support also under most circumstances non dis chargeable under bankruptcy.

The most common types of bankruptcy are Chapter 7 and Chapter 13, however there are
five bankruptcy types. Below is a list of five different types of bankruptcies:

Chapter 7 Liquidation

This type of bankruptcy is the easiest to understand. Business partners, a married couple,
or an individual can file for Chapter 7 proceeding. It involves a Credit Counseling
Agency interview. One of the requirements is a court appearance by the person filing.
The process normally takes approximately three months to finish. When it's completed, a
discharge from unsecured debts shall be given by the court. Then, a trustee shall be
assigned in determining which of the properties are exempted from liquidation. All the
properties regarded as non-exempt shall be used to repay the debts. Anyone who is
released from a Chapter 7 bankruptcy will not be permitted to file another Chapter 7 for
within 8 years.

Chapter 9 Municipality bankruptcy

This type of bankruptcy case chiefly deals with municipalities. The bankruptcy code says
that a municipality is a "political subdivision or public agency or instrumentality of a
State". As it deals with municipalities, it could be a very complex case.

Chapter 11 Reorganization Plan

Business corporations are usually filing for this type of bankruptcy. Normally, a
bankruptcy would have a court-appointed trustee, but in the proceeding of Chapter 11,
the corporation will organize their own reorganization plans. It will consist of various
types of strategies for repayment, including debt consolidation measures that are done in
cooperation with creditors.

Chapter 12 Family farmer bankruptcy or family fisherman bankruptcy

This type of bankruptcy proceeding is only for family fishermen and farmers that earn a
steady income yearly. The repayment of financial debts will depend on the prospect
earnings of the farmers and fishermen, while their properties will not be used to pay for
their lenders.

Chapter 13 Wage earner's payment plan

Only individuals who have fixed earnings can file for such type of bankruptcy
proceeding, which makes it possible for borrowers to save their assets. The debtor is
going to pay the financial debts by allotting a percentage of his/her income to repay the

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