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To start this outline, it is important to start by reminding you the definition of bankruptcy, also for the best advantage of those who know nothing about it. There are no actual words that are cordially accepted to explain this but whatever words are used, the meaning is the same. Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors.

Creditors may as a result, file a bankruptcy petition against a debtor in an effort to recover a portion of what they are owed.-involuntary bankruptcy. In the majority of cases, bankruptcy is initiated by the debtor -voluntary bankruptcy, which is filed by the bankrupt individual or organization

Chapter 7 bankruptcy

In this type of bankruptsy, bankruptcy trustee assemble and sells the debtor’s nonexempt assets and uses the profits of such assets to pay creditors in accordance with the provisions of the Bankruptcy Code. Part of the debtor’s property may be subject to liens and mortgages that promise the property to other creditors. Additionally, the Bankruptcy Code will allow the debtor to keep certain (exempt) assets; but a trustee will use the debtor’s remaining assets to pay debts. To meet the criteria for respite under chapter 7, the debtor may be an individual, a partnership, or a corporation or other business entity

Chapter 9 bankruptcy

The purpose of chapter 9 is to grant a financially distraught municipality protection from its creditors while it develops and settle a plan for amending its debts. The functions of the bankruptcy court in chapter 9 cases are generally limited to approving the petition, verifying a plan of debt adjustment, and ensuring execution of the plan.

Chapter 11 bankruptcy

An individual cannot file under chapter 11 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or fulfill with orders of the court, or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.

Chapter 12 bankruptcy

Chapter 12 is intended for “family farmers” or “family fishermen” with “regular annual income.” It enables economically troubled family farmers and fishermen to suggest and carry out a plan to refund all or part of their debts. Under chapter 12, debtors suggest a reimbursement plan to make installments to creditors over 3 to 5 years. Usually, the plan must provide for payments over three years unless the court approves a longer period “for cause.”

Chapter 13 bankruptcy

A chapter 13 type of bankruptcy is also called a wage earner’s plan. It facilitates individuals with expected income to build up a plan to reimburse all or part of their debts. Under this chapter, debtors suggest a refund plan to make installments to creditors over 3 to 5 years. If the debtor’s present monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period for cause.

Chapter 15 bankruptcy

Chapter 15 is a innovative chapter added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The purpose of Chapter 15, and the Model Law on which it is based, is to provide efficient mechanisms for dealing with bankruptcy cases involving debtors, assets, claimants and other parties in interest involving more than one country.

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