BANKRUPTCY

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What is Bankruptcy
Filing for bankruptcy under the United Bankruptcy Code offers individuals and businesss a legal
method to either eliminate (or discharge) debts by liquidating assets (if available) and
distributing them among creditors or by developing a reorganization plan or other plan involving
repayment of creditors over time. There are mainly two types of bankruptcy proceedings.
Liquidation of debts under Chapter 7 and repayment of debts under Chapters 9, 11, 12 and 13.

Chapter 7: This is the keep your property and get rid of the debt chapter - also known as the Liquidation Bankruptcy - and the bankruptcy that is best for most people. The debtor turns over all non-exempt assets to the bankruptcy trustee who then converts it to cash for distribution among creditors. At the end of the proceeding the debtor receives a discharge of debts, releasing him or her from personal liability for the debts. Certain debts, like child support arrears, are non-dischargeable. Chapter 13: Enables the debtor to keep assets, like a house, while making payments to creditors based on the debtor's income over a period of three to five years. Payments are made through a trustee and the court must approve the plan.