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Bankruptcy
Fraud: Types of Bankruptcy Filings
There
are two basic types of bankruptcy filings: liquidation
under Chapter 7 and rehabilitation of the debtor
under Chapters 11, 12, and 13.
- Chapter
7—allows the sale of personal or business
assets to pay debts. In some cases, eligible debtors
may receive discharges from their debts, except
for debts related to taxes, child support and
alimony payments.
- Chapter
11—the debtor is usually a business. In
this process the business is allowed to repay
debts while continuing to operate. The debtor,
with the participation of creditors, creates a
reorganization plan allowing the repayment of
all or part of the debt.
- Chapter
12—the debtors are eligible family farm
businesses. The provision allows family farm businesses
to file for bankruptcy, reorganize the farm’s
business affairs while the business continues
to operate, and repayment of all or part of the
farm debts.
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Chapter 13—allows individual wage earners
to reorganize their financial affairs under a
repayment plan that must be completed within three
to five years.
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