In this video, I explain the six types of bankruptcy chapters.
Start your free trialhttps://lnkd.in/g4hZAp2

In the United States, there are six primary types of bankruptcy, each referred to as a "chapter," and each designed for different situations. These chapters are outlined in the U.S. Bankruptcy Code. Here's a brief overview of each:

Chapter 7 - Liquidation Bankruptcy: This is the most common form of bankruptcy for individuals. It involves the liquidation of non-exempt assets to pay off as much debt as possible. The remaining unsecured debts are then discharged. Chapter 7 is typically used by those with limited income who cannot pay back a portion of their debts.

Chapter 9 - Municipality Bankruptcy: Chapter 9 is a form of bankruptcy for municipalities, such as cities, towns, villages, counties, taxing districts, municipal utilities, and school districts. It allows them to reorganize their debts.

Chapter 11 - Reorganization Bankruptcy: Often referred to as "reorganization" bankruptcy, Chapter 11 is primarily for businesses. It allows a company to continue operating while restructuring its business affairs, debts, and assets. It's also available to individuals, but it's more complex and expensive than other forms of personal bankruptcy.

Chapter 12 - Family Farmer or Fisherman Bankruptcy: Chapter 12 is similar to Chapter 13 but is specifically for family farmers and fishermen. It provides debt relief to those engaged in these types of businesses, allowing them to reorganize their debts and continue their operations.

Chapter 13 - Wage Earner's Plan: Chapter 13 is for individuals with a regular income who can pay back a portion of their debts through a repayment plan. Debtors propose a repayment plan to make installments to creditors over three to five years. It is often chosen by those who wish to keep secured assets like a home or car.

Chapter 15 - International Bankruptcy: Chapter 15 deals with cross-border insolvency cases, involving debtors, assets, claimants, and other parties located in more than one country. This chapter provides a mechanism for dealing with bankruptcy debtors and helps protect the value of the debtor's assets.

Each chapter has its specific procedures, requirements, and outcomes, and the choice of which chapter to file under depends on the individual or entity's financial situation and objectives.


#cpaexaminindia #cpaexam #businesslaw