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There are four kinds of bankruptcy proceedings. They are referred to by the chapter of the federal Bankruptcy Code that describes them.
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The most common form of bankruptcy. This form of bankruptcy is a liquidation proceeding in which the debtor's non-exempt assets, if any, are sold by the Chapter 7 trustee and the proceeds distributed to creditors according to the priorities among creditors established in the Code.
This is available to individuals, married couples, corporations and partnerships.
If there are assets which are not exempt, the trustee takes control of those assets, sells them and pays creditors as much as the proceeds permit.
Any wages the debtor earns after the case is begun are the debtor's, beyond the reach of creditors who had claims on the date of filing.
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Typically for corporations or partnerships, this is a reorganization proceeding,. Individuals, especially those whose debts exceed the limits of Chapter 13, may file Chapter 11.
In Chapter 11, the debtor usually remains in possession of his assets and continues to operate any business, subject to the oversight of the court and the creditors committee.
The debtor proposes a plan of reorganization which, upon acceptance by a majority of the creditors, is confirmed by the court and binds both the debtor and the creditors to its terms of repayment. Plans can call for repayment out of future profits, sales of some or all of the assets, or a merger or recapitalization.
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Modeled after Chapter 13, it is a simplified reorganization for family farmers, where the debtor retains his property and pays creditors out of future income.
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A repayment plan for individuals with regular income and secured debt less than $871,550 and unsecured debt less than $290,525.
The debtor keeps his property and makes regular payments to the Chapter 13 trustee out of future income to pay creditors for a period of 3-5 years.
Repayment in Chapter 13 can range from 10% to 100% depending on the debtor's income and the make up of the debt.
Certain debts that cannot be discharged in Chapter 7 can be discharged in Chapter 13. Chapter 13 also provides a mechanism for individuals to prevent foreclosures and repossessions, while catching up on their secured debts.
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3055 Wilshire Blvd Suite 1200
Los Angeles, California 90010
(213) 384-2220 (714) 554-6500
email: info@LosAngeles-BankruptcyLawyer.com
Los Angeles Bankruptcy Lawyer - Chapter 7 / Chapter 11 Bankruptcy Attorney |
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