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Are there different types of bankruptcy?

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Yes, and they are known by the title of the Chapter of the Federal Bankruptcy Act in which they appear. Each "Chapter" contains a different set of laws and rules.

While there are several different types of bankruptcy procedures, each known by the title of the chapters of the Bankruptcy Code where they appear, the two most commonly used by individual consumers are:

(1) Chapter 7 bankruptcy is the most frequently used by individuals. Under this arrangement, a court-appointed trustee collects your assets, sells them for cash, and makes distributions to creditors. You can keep assets that are exempt either under Federal law or the law of your home state. You cannot repeat this filing for six years.

(2) Chapter 13 bankruptcy is designed for an individual debtor who has a regular income and stable job. Under this procedure, you pay debts off over a three-to-five year period and keep your property. At a confirmation hearing, the court either approves or disapproves the plan. A Chapter 13 can be filed at any time.

Individuals may also use Chapter 11 reorganizations, but this form is generally targeted to businesses. Farmers can use Chapter 12

Topic starter Posted : 27/04/2010 6:45 am
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Re: Are there different types of bankruptcy?

Types Of Bankruptcy-:

  • Chapter 7 (Straight Bankruptcy)

In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for "exempt" property which the law allows you to keep. In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors.

  • Chapter 13 (Adjustment of Debts)

In a chapter 13 case you file a "plan" showing how you will pay off some of your past due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property especially your home and car--which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors.

Posted : 29/06/2010 6:17 am