Bankruptcy Law

Bankruptcy is a process to relieve and resolve personal and business debt. Several types of bankruptcy exist under the Bankruptcy Code.

Chapter 7 bankruptcy is a proceeding in which the person filing bankruptcy gets a discharge of debt with the possible sale of unprotected assets. This would involve the collection and distribution to creditors of the non-exempt property of the bankrupt party (called the "Debtor") by a trustee. Individuals who qualify for a Chapter 7 usually get to keep most, if not all, of their assets. The actual sale of assets by a trustee is an infrequent event. Most Chapter 7 debtors have "no asset" cases in which none of their assets are liquidated.

Chapter 13 bankruptcy involves a Court approved payment plan from the future earnings of the Debtor. Individuals with significant income or assets may need to pursue this type of "wage earners" repayment plan. This is a potential viable option for people behind on their mortgage or car payments. Also, if assets might be liquidated in a Chapter 7 bankruptcy, debtors can pursue a Chapter 13 bankruptcy to keep their assets.