Types of Business Bankruptcy
- Chapter 7 – Straight Bankruptcy. Requires a debtor to be within a certain asset limit or to give up the property over that limit to be sold by the court. Fully discharges the debts.
In order to file chapter 7 bankruptcy:
- You must reside or have a domicile, a place of business, or property in the United States or municipality.
- You must not have been granted a Chapter 7 discharge within the last 6 years or completed a Chapter 13 plan.
- You must not have had a bankruptcy filing dismissed for cause within the last 180 days.
- It must not be a “substantial abuse” of the Bankruptcy Code to grant the debtor relief. Generally speaking, if after you pay the monthly expenses for necessities there is not enough money to pay the remaining monthly debts, then granting a discharge would not be an abuse of the Bankruptcy Code.
- It would not be fundamentally unfair to grant the debtor relief under Chapter 7.
- Chapter 11 – Reorganization. Usually reserved for businesses or individuals with very large debts.
- Chapter 12 – Reserved specifically for farmers.
- Chapter 13 – Wage Earner Plan. This requires a debtor to file a plan to repay at least a portion of the debts from their current wages.
There are several advantages to Chapter 13 bankruptcy which include:
- Modifying Repayment Time, Interest and Amount
- Preventing Foreclosures
- Discharging Otherwise Non-dischargeable Debts
- Retaining Assets
- Preventing Repossession
- Protecting Co-debtors
Modifying Repayment Time, Interest and Amount