Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed or initiate a restructuring. In the majority of cases, however, bankruptcy is initiated by the debtor.
Bankruptcy in the United States is a matter placed under Federal Jurisdiction by the Constitution of the United States which allows Congress to enact uniform laws on the subject of bankruptcies throughout the United States. Federal law is amplified by state law in some places where Federal law fails to speak or expressly defers to state law.
There are six types of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code:
- Chapter 7: basic liquidation for individuals and businesses
- Chapter 9: municipal bankruptcy
- Chapter 11: rehabilitation or reorganization, used primarily by business debtors, but sometimes by individuals with substantial debts and assets
- Chapter 12: rehabilitation for family farmers and fishermen
- Chapter 13: rehabilitation with a payment plan for individuals with a regular source of income
- Chapter 15: ancillary and other international cases
The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. As much as 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases. Corporations and other business forms file under Chapter 7 or 11.
Harper Law Firm has years of experience in dealing with all types of bankruptcy cases. If you or someone you know is in need of assistance while recovering from bankruptcy contact us for a free evaluation of your case.
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