Types of Bankruptcy Filings
Filing for Bankruptcy is more complicated than just filing legal paperwork. There are different types of bankruptcy, bankruptcy laws, ramifications of bankruptcy, bankruptcy court, and other things to consider before filing for bankruptcy. Declaring bankruptcy isn’t a simple process, and working with a bankruptcy attorney or a bankruptcy lawyer is generally necessary.
Bankruptcy is the legal proceeding that involves a person or a business who is unable to repay their debts. Filing for bankruptcy gives that person or business the opportunity to erase their debt and start from scratch, while allowing the creditors to receive part of the debt based on the person’s or business’ assets. Bankruptcy protection can benefit the filer if there are no other options.
There are different types of bankruptcy filings for different circumstances. Chapter 7 bankruptcy, Chapter 11 bankruptcy, Chapter 13 bankruptcy, Chapter 12 bankruptcy, Chapter 9 bankruptcy, and Chapter 15 bankruptcy. Each different bankruptcy filing is for a different situation. While some are specific for different business types, some are specifically for individuals. Everything from corporations, partnerships, sole proprietorships, family farmers, family fishermen, individuals with regular income, municipalities (municipal organizations), and even filing for groups located in more than one country.
While bankruptcy may be an option, there are also myths about filing for bankruptcy that should be considered. In addition, people who are thinking about bankruptcy protection should review the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). The BAPCPA was established by Congress in 2005, giving the U.S. Trustee Program new responsibilities including:
• implementing the new “means test” to determine whether a debtor is eligible for chapter 7 (liquidation) or must file under chapter 13 (wage-earner repayment plan);
• supervising random audits and targeted audits to determine whether a chapter 7 debtor’s bankruptcy documents are accurate;
• certifying entities to provide the credit counseling that an individual must receive before filing bankruptcy;
• certifying entities to provide the financial education that an individual must receive before discharging debts; and
• conducting enhanced oversight in small business chapter 11 reorganization cases.
Bankruptcy is a serious legal proceeding, and consultation with a bankruptcy lawyer, bankruptcy attorney, or other bankruptcy legal professional is strongly advised.