Chapter 7 bankruptcy is available to both individuals and businesses. This type of bankruptcy is a liquidation. For businesses be aware this type is used if you want to shut your doors. Chapter 7 takes about six months to complete; it is usually quick and simple.A trustee is appointed in a Chapter 7 and runs the case. The trustee determines whether the properties the business or individual owns are exempt or non-exempt. The trustee will sell the non-exempt properties and use that money to pay back any debt owed. A business will not retain any assets and an individual will generally only retain any exempt property or property subject to debts that are being paid.A “means test” is also required for an individual Chapter 7 bankruptcy. This test determines if the individual filing for bankruptcy qualifies for Chapter 7. An attorney will determine if a business or individual is fit for Chapter 7 or if some other option would be better.
Chapter 13 bankruptcy, or wage earner bankruptcy, can only be filed for individuals with steady income. With Chapter 13, individuals can keep more of their property. There is still a trustee, but the individual gets to maintain more of their non-exempt property by making payments through the Chapter 13 plan.This process takes place over the duration of three to five years. Over that time span, the trustee and court supervision are required. Also, this process has debt limits. Talking with an attorney can help determine if an individual falls within the debt limits and qualifies for this type of bankruptcy.
Businesses and individuals can file for Chapter 11 bankruptcy, which is a restructuring that allows the business to continue after filing for bankruptcy. Chapter 11 allows businesses and individuals to keep much more of their property by making payments through the Chapter 11 plan, and no trustee is appointed so long as the business or individual acts appropriately. The repayment plan is as quick or as long as is necessary for the process to be successful.
For more information on how to get the bankruptcy process started, check out our bankruptcy resources, necessary forms from the United States Courts, and contact our expert team of bankruptcy attorneys. We’re in this with you.
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