THE BANKRUPTCY LAWYER

JOHN FRANCIS MURPHY, ESQ.

www.TheBankruptcyLawyer.net

Doylestown, Bucks County, PA 18901

(215) 345-7075

   

 

WHAT ARE THE DIFFERENT TYPES OF BANKRUPTCY?

        The Bankruptcy Code provides for five different types of bankruptcy filings, chapter 7, chapter 13, chapter 12, chapter 9 and chapter 11.

        Chapter 7 is one type of bankruptcy that is available for individuals.  It is also called straight bankruptcy or liquidation.  The bankruptcy court appoints a trustee who administers the bankruptcy.  The individual filing for bankruptcy usually retains all the typical types of household goods and clothing.  He may also retain his home and vehicles as long as he does not have more equity in those items than he can exempt.  If the bankruptcy trustee allows an individual in bankruptcy to keep a car secured by a car lien or a house encumbered by a mortgage, the individual filing for bankruptcy must pay all car and mortgage payments as they fall due and pay the insurance on those items.  A chapter 7 bankruptcy usually lasts about four to six months.  At the end of the bankruptcy, most debts are extinguished through a discharge of debts.

        Chapter 13 is another type of bankruptcy available for individuals.  This bankruptcy lasts for the duration of a debt repayment plan, from three to five years.  General, unsecured creditors are usually only repaid a small percentage of what is owed, but past due taxes must be paid in full, as well as arrearages on secured debt, such as a mortgage or car loan.  This bankruptcy may allow individuals to keep a home or car even if they have become seriously delinquent on the loans.  At the end of a successful bankruptcy, most debts are extinguished through a discharge of debts.  

        Chapter 12 is a type of bankruptcy available for family farmers.      It functions much like chapter 13. 

        Chapter 9 is a type of bankruptcy for municipalities.

        Chapter 11 is occasionally used by individuals but is primarily used by large corporations, which are insolvent, that wish to pay off their debts through  a repayment plan.

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