e. michael vereen iii: what do chapters mean in bankruptcy?
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E. Michael Vereen III: What Do Chapters Mean in Bankruptcy?
Michael Vereen
Introduction E. Michael Vereen III is a lawyer focusing on bankruptcy law in
the metro Atlanta area. For more information, visit Vereen’s website at www.vereenlaw.com.
If you find yourself swimming in debt with no glimpse of light at the end of the tunnel, it may be time to consider bankruptcy. Filing for bankruptcy can give people or organizations a chance to clear the slate. There are six different types, or chapters, of bankruptcy: Chapter 7, Chapter 9, Chapter 11, Chapter 12, Chapter 13, and Chapter 15.
Chapter 7:In chapter 7 bankruptcy, an individual or company’s assets are liquidated in order to pay debts. The debtor may designate some assets as exempt and keep them; however, a trustee is hired to manage the sale of all other property.
Bankruptcy Chapter 9:
Chapter 9 bankruptcy applies only to governments and municipalities. It is designed to give poor areas time to reorganize and pay off debts by renegotiating and refinancing loans.
Chapter 11:Perhaps the most costly and complex form of bankruptcy, chapter 11 involves the reorganization of debt, usually with the intent of keeping a business running. A debtor must submit a plan, taking into consideration all assets, liabilities, and other business affairs, detailing how debts will be paid.
Chapter 12:This form is bankruptcy is specifically intended for individuals and corporations involved with family farms. Debtors must submit a plan to repay their loans over time.
Conclusion Chapter 13:
Chapter 13 bankruptcy is like chapter 11, but on a smaller scale. Mostly utilized by individuals, chapter 13 may not be filed by entities whose debt exceeds a certain amount.
Chapter 15:This chapter is relatively new, originating with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Chapter 15 bankruptcy deals with multinational cases.