Chapter 13 Bankruptcy

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The second type of bankruptcy we are going to discuss is Chapter 13. Chapter 13 Bankruptcy is called “Individual Debt Adjustment” under the U.S Bankruptcy Code. From its name, Chapter 13 bankruptcy is mainly formed for individuals to reorganize their assets to pay back their debts. Like filing for Chapter 7, to file for a Chapter 13, the debtor must also file a petition with the bankruptcy court and provide all the necessary paperwork with a list of creditors and the debts that need to be paid. Then the court appoints a trustee that works with both the debtor and the creditor to create a repayment plan for the debtor to payback their debts. If the court then agrees on the repayment plan, the trustee has to collect monthly payments from the …show more content…
Chapter 11 Bankruptcy is called “Reorganization” under the U.S Bankruptcy Code. Like filing for Bankruptcy in Chapter 7 and Chapter 13, to file for Chapter 11 Bankruptcy, the debtor must also file a petition with the bankruptcy court and provide all the necessary paperwork with a list of creditors and the debts that need to be paid. However, Chapter 11 is usually filed by businesses and organizations not by individuals. But that doesn’t mean that individuals can’t file for a Chapter 11 Bankruptcy, they could, but filing for a Chapter 7 and a chapter 13 is easier and suitable for the situations of individuals. On the other hand, an organization planning to file for a Chapter 11 Bankruptcy must present a reorganization plan explaining to its shareholders, the creditors, and the court exactly how the organization will pay back its debts. A trustee is then appointed by the court, who will also appoint a committee to represent the company and its shareholders. Creditors whose debts includes a collateral are paid first, then unsecured creditors, and lastly the shareholders. Chapter 11 Bankruptcy gives the opportunity to the organization to stay in business and reconstruct its businesses, but filing for Chapter 11 Bankruptcy can also be very expensive and …show more content…
Chapter 12 Bankruptcy is called “Family Farmer Bankruptcy” under the U.S Bankruptcy Code. Like filing for Bankruptcy in Chapter 7, Chapter 13, and Chapter 11, to file for Chapter 12 Bankruptcy, the debtor must also file a petition with the bankruptcy court and provide all the necessary paperwork with a list of creditors and the debts that need to be paid. However, Chapter 12 is mainly formed for family farmers or fishermen. It was created due to the hardships that farmers and fishermen faced in 1980. It is almost the same as Chapter 13, bit it gives more time to pay the debts according to the repayment plan. By filing a Chapter 12 Bankruptcy, the court prevents all collection actions taken by creditors to retrieve their money. Then the court appoints a trustee who schedules meetings between the debtor and the creditors, where the debtor presents a repayment plan to the creditor limited to a period of maximum 5 years. The court then approves the repayment plan and the trustee starts to collect the installments for the creditors from the
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