Chapter 7 bankruptcy is the chapter of the Bankruptcy Code that provides for the sale of the debtor's non-exempt assets for the distribution of the proceeds to creditors (liquidation). Usually, a trustee collects the debtor's assets, which forms the bankruptcy estate, under court supervision and ?converts? it to cash for onward distribution to creditors. This is subject to the rights of the debtor to keep certain assets, which are exempt (for example personal clothing). Also, distribution of the liquidated assets is subject to the rights of secured creditors. As may be expected, most Chapter 7 bankruptcy cases are ?no assets? cases, as the debtor literally has no assets that can be liquidated.
An individual or business filing for a Chapter 7 bankruptcy case is required to begin by filing a petition with the relevant bankruptcy court serving his area or the area where the business is registered or operated with its main assets.
The petition stage can be described as the declaration stage. The debtor will also need to provide other documents to the court in addition to their petition. This may include but not limited to;
? A schedule of assets and liabilities
? A schedule of current income and expenditures
? A schedule of executory contracts and unexpired leases
? A statement of monthly net income and any anticipated increase in income or expenses after filing.
Basically, the additional documents would capture all your assets, debts and financial affairs. On the average, the process may take up to six months and may cost the debtor in terms of filing, and administrative fees. Unfortunately, you cannot file a Chapter 7 bankruptcy if you have a bankruptcy discharge in the last six to eight years and also if your current financial affairs can permit a Chapter 13 bankruptcy. Debts like priority taxes, support, student loans, liens and any debts that were reaffirmed are not discharged under Chapter 7 Bankruptcy.
CHAPTER 11
Knowing the different types of bankruptcy is very importance especially if you are into business. Always remember that businesses sometimes hit a bad spell so you have to be prepared for any eventualities. If you are a business owner, you need to know about Chapter 11 Bankruptcy also known as Re-organization Bankruptcy. Since with type of bankruptcy involves Partnerships and Corporations, it is imperative you should know about this type of bankruptcy.
Under Chapter 11 Bankruptcy, businesses are allowed to propose payment plan to their creditors. The payment plan shall include the length of time needed for the business to recover and settle its financial obligations. Although there are some provisions under Chapter 11 Bankruptcy that are similar to Chapter 13 Bankruptcy, the two are quite different in the sense that Chapter 13 bankruptcy is more concerned with individuals. The fees that apply to partnerships and corporations are also different to those fees imposed on individuals who file for bankruptcy.
What Fees Apply Under Chapter 11 Bankruptcy?
A mandatory filing fee of $1,000 and additional $39 miscellaneous administrative fees apply under Chapter 11 Bankruptcy. In cases of joint petitions, only one filing fee is imposed. Since these fees are considered as mandatory, the failure of the debtor to pay these fees may cause the dismissal of the petition. Once the case is already in progress, the business or the petitioner may be required to pay the court trustee every quarter. The amount of the fees differs depending on the amount involved. In most cases, the fees would range from $250 up to $10,000.
