Filing for bankruptcy can be a way for struggling businesses or indebted individuals to clear these debts and find a way to overcome them. Many people struggle with debt and other financial issues which is why bankruptcy was introduced. Companies and other organizations are also not immune from changes in the economy or poor financial decisions. Bankruptcy has different types that can be filed for by individuals and companies. Let’s take a deeper look at the key information and key differences between these bankruptcy types according to a chapter 7 bankruptcy lawyer Tampa, FL from Carolyn Secor, P.A.
There are two main types of bankruptcies that individuals can file for. These are chapter 7 bankruptcy and chapter 13 bankruptcy. While they are similar in that they are filed by individuals and seek to complete the same goal, debt repayment, they do have a key difference. Chapter 7 involves the liquidation of assets to pay back creditors. This means certain assets will be sold off to help cover the debts that are owed. Certain things like houses or a primary vehicle may be protected but in some cases are not. Chapter 13 bankruptcy doesn’t involve the liquidation of assets but instead puts someone on a 3-5 year repayment plan. This repayment plan will depend on factors like how much money the person earns and how much debt they owe.
Business / Organization / Company Bankruptcy
Chapter 9 – This type of bankruptcy is for municipalities(cities, counties, townships, and school districts). A repayment plan is established by creditors to repay over a certain period of time that generally doesn’t involve any liquidation.
Chapter 11 – Chapter 11 is for organizations, businesses, or companies to file for bankruptcy while still being able to operate on a daily basis. The filer will restructure or reorganize their debts and finances to operate the company and repay their creditors the money that is owed over a certain period of time.
Chapter 12 – Chapter 12 is for fishermen and farmers. It may be for family-owned farms or fisheries or also for corporate farms or fisheries. The farm or fishery can remain in operation and keep its assets while in this bankruptcy. A repayment plan will be established by creditors that will have certain parameters and other rulings in it.
Chapter 15 – Chapter 15 is seldom used compared to the other types of bankruptcies and is also the newest. This bankruptcy type is used for international debt cases that involve the United States and other countries.
Legal help is available for bankruptcy-related issues for individuals, businesses, and companies. Turning to a lawyer who has experience in this realm can make things a lot easier overall. There are a lot of moving parts in bankruptcy and different things to consider. Nuances or other confusing details may arise in the bankruptcy process that is difficult to deal with. Certain negotiations or creditor terms may seem unfavorable and difficult to process. For assistance with these matters, consider turning to a lawyer for help with your case.