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Written by jessica Alba
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Bankruptcy Law ExplainedBankruptcy law provides the groundwork for any business or any person who may find themselves in a position where they can no longer make payments on the debts they owe. There are several types of bankruptcy available, many of which provide relief from paying heavy debts in a short amount of time. Bankruptcy is the last resort for many people. There are definite negative aspects to filing bankruptcy including the simple fact that bankruptcy will destroy the credit of that individual or may even close the business down.
What Are The Laws In the United States , there are several types of bankruptcy that can be filed. These are called bankruptcy chapters. Each chapter does something different or defines who can file. Each chapter is a specific location in the bankruptcy laws of the country. Here is a fast look at some of the most common chapters in bankruptcy.
- Chapter 7 bankruptcy: This is the most common form of bankruptcy. This particular type is designed for individuals and businesses. It allows for total discharge of debts or liquidation of assets to pay for debts.
- Chapter 11 bankruptcy: This form of bankruptcy is for the reorganization, or sometimes called the rehabilitation, of a business. In some cases, individuals can file this form of bankruptcy when they have substantial debts as well as a large amount of assets.
- Chapter 12 bankruptcy: This form of bankruptcy is designed specifically for family farmers and fisherman. It is a type of bankruptcy that allows for the reorganization or rehabilitation of these individuals.
- Chapter 13 bankruptcy: this chapter is for rehabilitation or reorganization of debt for individuals. This type of bankruptcy does not discharge debt but allows for a process of restructuring the debt to allows for repayment. It is designed only for those who have a regular source of income since debts are stilled paid off in this program.
The most common form of bankruptcy is Chapter 7 bankruptcy. In this form, designed for businesses and for personal use allows for the surrendering of all assets. The assets are then liquidated and used to pay for the debts in question. Most states do have in place what is called exempt property, which allows for specific types of property to remain out of the filing unless the property owner decides to include this debt asset into the filing.
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