Chapter 7, chapter 11, chapter 12 and chapter 13, are not part of the travel log diaries of some wayward adventurer that never got across the bridge. They are not chapters of the Shrine's or Moose Lodge either. These are different types of bankruptcy that can be filed. They are very different in nature but easily understood. Each form of bankruptcy is designed for specific situations and allows for different things.
Emily had a pretty bad decade that left her in financial ruin. She lost her job and started paying bills using credit cards knowing that her financial situation would improve. She could not afford the Cobra payments to maintain her health insurance and then she got hit with several medical emergencies. Her assets were few, a car and small boat, some art she had collected over the years. Her lawyer suggested she file for chapter 7 since most of her debt was dischargeable. She did not have a lot of student loans, nor was her debt obtained through fraud or criminal behavior. She was not trying to discharge a criminal fine or child support and alimony. Her assets would be liquidated and the creditors would be paid from the proceeds. Since she did not have a lot of assets to protect she would be able to start over with a clean slate and get out from under her debt burden.
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Tom has a lot more to lose so he does not want to consider Emily's path. Tom has a steady job and source of income. He made a couple of bad investments and got stuck holding worthless goods. His debt is not huge; the unsecured debt is less then $200,000. He wants to hang onto his assets and property so he decides to file for the chapter known as 13. He will make payments to a trustee who will see that the creditors get paid back anything from 10 to 100 percent of the debt over several years. Tom's cousin Dale is also in trouble. He owns a farm and is struggling to pay off debt he accrued after three years of drought and bad harvests. He will file under the chapter known as 12. This is like thirteen, but is designed for farmers so they can retain their property and pay down their debt.
Ellen is the CEO of a medium size business that took a beating. The company has debts too large to file under 13. It also has a new management team and a strong revised business plan. By filing under the chapter known as 11, the business will be able to continue running and reorganize itself. A trustee will be appointed and a creditors committee will decide if the new plan holds promise. The creditors will be paid through liquidated assets or through future revenue the company earns.
There are many forms of bankruptcy designed to help businesses and individuals get a second chance. In these times of economic turmoil more and more people are discovering their options under the bankruptcy laws.
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