Understandably, the government made provisions on
different bankruptcy proceedings that a person or a group
can acquire to protect himself from his creditors. This
way, lawsuits that creditor are bound to file against the
borrower would be avoided. He will also have a chance to
protect his properties of retain possession of his assets.
However, it is important to remember that declaring
bankruptcy will not prohibit criminal prosecution or cancel
tax obligations. Also, a person may not use bankruptcy as
a reason to excuse himself of his financial obligations for
his children or alimony.
Let's see some basic points about each kind of bankruptcy
that are available to the public.
Chapter 7. Among the 5 types of bankruptcies, this one is
the most uncomplicated. An individual, a married couple or
business partners can apply for this proceeding. Before
filing for an application, the individual or the group will
be interviewed by a representative from a Credit Counseling
Agency. He will be required to make an appearance on
court. It usually takes about three and a half months
before the proceedings are done. Afterwards the individual
will be declared free from past unsecured debts. He will
then be assigned a trustee who will be in charge of
identifying which of his assets will be exempted from
bankruptcy. The rest of his assets will then be sold and
distributed among his creditors.
Chapter 9. This type of bankruptcy proceeding particularly
deals with municipalities. Under the bankruptcy code, a
municipality could be a political subdivision or a public
agency. Since it involves a larger group, this type is a
lot more complex than the other bankruptcies.
Chapter 11. This type of bankruptcy proceeding generally
applies for business corporations. There wouldn't be any
designated trustee for a corporation; instead the
corporation itself will come up with its own reformation
plans. This may include actions to try to recover the
productivity of the business, debt consolidation, and
repayment strategies such as selling some assets, merging,
and other possible options to generate some funds.
Chapter 12. This type of bankruptcy is exclusively for
family farmers and fishermen. In this case, he will not
lose any of his assets but will be required to pay of his
debts out of his future earnings.
Chapter 13. Similar with chapter 12, here an individual is
allowed to retain his property and pay off his credits out
of his future salary. He may allot at least 10% or more
out of his income to make up for his debts. Provisions
could be made on his behalf to give some assistance with
his payment plans.
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Liz Roberts is a loan consultant with NewHorizon Finance
and has been providing consumers and business owners with
financing since 1989. Bad Credit? Join our mailing list for
tips on building and repairing credit yourself, without
hiring a credit repair service or view our list of credit
cards for bad credit at
http://www.newhorizon.org/Info/unsecured.htm
Copyright 2007
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