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Differences Between Chapters 7, 11, 12, and 13 Bankruptcy

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    Chapter 7 Bankruptcy

    Liquidation Bankruptcy for Individuals

    Sometimes referred to as “straight bankruptcy”, in Chapter 7 bankruptcy, the bankruptcy trustee nullifies many, or all, of your debts. The principle advantage is that the debtor comes out without any future obligations on his discharged debts. If a debtor wants to keep an item (Ex: house or car) which is security for a loan, he/she must continue these payments. If the debtor wants to discharge that car loan, then the debtor must surrender the car. Bankruptcy does not discharge all taxes and most school loans; however, some do qualify to be discharged.

    Chapter 11 Bankruptcy

    Usually filed by Large Businesses to keep afloat and remain in business.

    Chapter 11 is the chapter usually used by large businesses to reorganize their debts and continue to stay afloat while they reorganize their debts. If a chapter 7 bankruptcy is filed, corporations, partnerships, and LLCs cannot use chapter 13 to reorganize and must cease business operations. There are very few law firms that handle chapter 11 cases because these are of some of the most complex cases. However, many times individuals and companies cannot obtain the relief they need under chapter 7 or chapter 13.

    Chapter 12 Bankruptcy

    Filed by Farmers or Commercial Fishermen.

    Chapter 12 is the chapter used by farmers or commercial fishermen to reorganize their debts and continue operating. The advantage of Chapter 12 is the repayment/reorganization plan will allow for payments to be made seasonally, which the farmer or fisherman is dependent upon to earn his/her wages. Therefore, the limitation of only being able to restructure loans in a period of 5 years in chapter 13 cases is not a limitation in Chapter 11 or Chapter 12 cases.

    Chapter 13 Bankruptcy

    Filed by individuals to reorganize debts for future repayment.

    In a Chapter 13, the debtor must pay all or part of his debts from the future income over a period of three to five years through the repayment plan. If the court approves the plan of payment, the debts will be paid in full or partially by the chapter 13 debtor.   Most of the debt that is not paid by the plan of reorganization will be discharged. However, most long term debt and home mortgages must be paid in their normal monthly payments, the exception being those due at the time of filing. Upon completion of the plan, the long term debt will become current and the ongoing payments will continue. The plan can be approved even if the creditors do not agree with it. In most cases, the plan payment will be less than the combined payments of the debts prior to filing, and the debtor can retain assets under the condition the debtor makes the payments as required and maintains insurance on items, such as his home and car which are security for loans being paid through or outside of the plan.

    The Law Offices of Anderson and Ferrin are located conveniently in the heart of downtown Orlando, Florida, and experienced in these forms of Bankruptcy Law. For a Free Consultation and to find out what the best option is for you.

    Chapter 11, 7, 13 Bankruptcy and Loan Modification Attorneys
    Lawyers in Orlando, Florida. Call 407-412-7041.