Who Can File For Chapter ?
There are several ways one can file his bankruptcy under different chapters. There are different options to examine chapters of bankruptcy. The three chapters are – Chapter 7, Chapter 11, and Chapter 13. |
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Chapter 7 bankruptcy involves liquidation proceeding in which a debtor's non-exempt assets are sold by the Chapter 7 trustee and the money is distributed amongst the creditors, according to priorities in the Code. Eligibility for filing Chapter 7 is determined by the means test which is instituted with the 2005 amendments to the bankruptcy code. In most cases, all the assets are exempt, and so there are no assets that can be liquidated and there is no sign of dividend to creditors’ Chapter 7 is the quickest and simplest form of bankruptcy. It is available to individuals, couples, partnerships and corporations.
Chapter 11 bankruptcy is to individuals, partnerships and corporations. It has no limits to the amount of debt. The debtor remains in possession of his assets, and operates his business under the supervision of the court and for creditors benefit. The debtor, in possession is always a fiduciary for the creditors. If the debtor's management is not effective, a trustee is appointed. A creditors committee gets appointed. It is a body with whom debtors can negotiate plans of reorganization. A Chapter 11 plan is only confirmed upon the affirmative votes given by creditors, who generally are divided by plan into various classes based on their characteristics of claims. If the debtor doesn’t get votes to confirm a plan, the debtor may attempt to "cram down" a plan on creditors and thus get his plan confirmed, though the creditor is opposing.
Chapter 13 bankruptcy is a repayment plan which protects debtor from collection actions during his case and thus discharges the unpaid balance of the dischargeable debts at the end of the plan. In case of Chapter 13, debtor can impose the debt management plan on the creditors that creditors have to accept, to stop the running of the interest on the debt. The court will then enforce the plan against the uncooperative creditors.
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With the contraction and squeezing of the economy, several well intentioned as well as hard working people, the only possible relief for them that they see lies in the bankruptcy courts. In order to avoid things like paying some of their financial responsibilities such as the child support, many of the people may seek the imagined solution afforded by the Chapter 13 bankruptcy laws. But they do not know that they are wrong considering such options in order to avoid their responsibilities.