BANKRUPTCY IN A FLASH (Ask an Attorney about Bankruptcy Law - Quick Overview)

"What are the various types of bankruptcy available to me, and what are the differences between them?" is a question that I am often asked by potential clients. An individual can file bankruptcy under Chapters 7, 11, and 13 of the Bankruptcy Code.

Our present system of Bankruptcy law has its roots throughout history in the Middle Ages as well as Biblical references found in Leviticus 25:1-55. Thankfully we have progressed from debtor imprisonment to our current system.

Chapter 13 of the Bankruptcy Code allows for the adjustment of debts of an individual with regular income. Regular income is described as income sufficiently stable and regular to enable the debtor to make payments under a Chapter 13 plan. Typically, a Chapter 13 plan creates repayment for 3-5 years.

It is a common misconception that an individual must be insolvent in order to file for relief under Chapter 13; howerver, this is not the case. What is required is that the individual has debts. In sum, Chapter 13 was intended to allow a debtor with regular income an alternative to liquidation.

Chapter 7 of the Bankruptcy Code is what comes to mind for most people when they think of bankruptcy. One of the purposes of Chapter 7 liquidation proceedings is to give the debtor a fresh and clean start from the harassment of creditors and from worries caused by the weight of too much debt.

Finally, in a Chapter 11 proceeding a debtor seeks to reorganize his or her business in order to avoid liquidation.

Determination of filing for relief under Chapters 7, 11, and 13 of the Bankruptcy Code requires the balancing of a series of complex and sophisticated statutory and common law provisions. An attorney, in order to make a determination of the appropriate type of bankruptcy for an individual, will assess the types of debt the individual has and the dischargeability provisions of each chapter as well as a host of other factors.

I hope this has answered a few of the more commonly asked questions regarding bankruptcies. Should you desire to discuss this type of matter with me personally and in more detail, please feel free to contact me.