In the United States there are four bankruptcy filings; chapters 7, 11, 12 and 13.
What an individual or company files for is very much determined by the financial situation, chapter 7 is very common and is used by those who are willing to sacrifice everything and start over whereas chapter 13 is more often used by those individuals who have considerable assets and regular income and is willing to undergo court approved reorganization. A Las Vegas Nevada bankruptcy attorney is best suited to assisting you in making the determination of how you will go about filing for bankruptcy.
Chapter 7 Bankruptcy Explained
When a debtor files for chapter 7 bankruptcy he is giving up all his assets for liquidation and is willing to start over with a clean slate. Once the filing has been made the court appoints an administrator whose job is to oversee and cause for the sale of the debtors assets. This may not be as bad as it sounds, not everything that a person owns is sold, by law he may even be allowed to keep his primary place of residence and all his clothing and other personal items.
Once the debtor’s assets have been sold, the administrator pays the creditors from the proceeds. Rarely will the proceeds cover all the debt, some creditors may not receive anything at all so those are financial obligations that are discharged or forgiven by the court. Once an individual files for chapter 7 bankruptcy, he is not allowed to file again for a period of seven years.
Chapter 13 Bankruptcy Explained
Bankruptcy chapters 12 and 13 are very similar except that chapter 12 is for family farmers and chapter 13 is for individuals. For individuals to file for chapter 13 they must have a steady income and debt of less than $1.077 million of unsecured and secured debt. Upon successful filing of chapter 13 the individual is given a trustee and between the trustee, the debtor and the debtors Las Vegas Nevada bankruptcy attorney a proposed repayment plan is developed. Once developed and agreed upon, the debt repayment period can span from 3 to 5 years.
In the case of chapter 13 bankruptcies the debtor can keep all their assets, not just those that are legally exempt and the debt repayment is only a fraction of the original debt, often as low as 30 to 40%. Chapter 11 was originally intended for the reorganization of large companies and corporations but individuals can file as well. The main difference between chapter 13 and chapter 11 is that the limit on secured and unsecured debt is not limited.
Just as debtors have certain rights during bankruptcy so do creditors. If you need a Las Vegas Nevada bankruptcy attorney to help you protect your rights as a creditor then you are invited to contact The Law Office of Hayes & Welsh. They are dedicated to protecting creditors’ rights.
