What Does Bankruptcy Mean?
State of insolvency or an organization--in other words, an inability
to pay debts. There are two kinds of legal bankruptcy under the
U.S. law: involuntary, when one or more creditors petition to have
a debtor judged insolvent by a court; and voluntary, when the debtor
brings the petition. In both cases, the objective is an orderly
and equitable settlement of obligation.
The five most common types of bankruptcy are:
7: Also known as liquidation, allows individuals or businesses
to give up nonexempt assets and walk away from most debts. (find
out more click
Chapter 9: This section allows municipalities to reorganize debt.
11: For individuals and, more commonly, businesses to reorganize
debt. Similar to Chapter 13, in that it allows the filer to draft
a plan to repay some debt while retaining assets. Chapter 11 has
no debt limits, but is much more complicated, and therefore expensive,
making it financially feasible mainly for businesses and very wealthy
individuals. (find out more click
Chapter 12: Allows family farmers to reorganize debt. It works
very much like Chapter 13, but with higher debt limits.
13: For individuals who need to restructure their debt load.
Some creditors will be paid back in full with interest, others in
full and the remainder will be repaid a percentage of the debt.
(find out more click
is Chapter 7 Bankruptcy?
is Chapter 11 Bankruptcy?
is Chapter 13 Bankruptcy?