What Are The Differences Between Chapter 7, 11 & 13 Cases

Chapter 7:  Also called a straight or liquidation bankruptcy, this chapter of the U.S. Bankruptcy Code is intended to provide an orderly, court-supervised process for selling certain assets to pay creditors.  The Bankruptcy Court appoints a trustee who oversees and administers your ‘bankruptcy estate’, which consists of your assets.  The law may permit you to keep some of your property, and the Nevada law tends to be quite generous in this regard.  Any other assets are then sold by the trustee and the funds are distributed to your creditors.  As an individual filer, your remaining debts are then discharged, unless there is an objection.  In most cases, the process takes just a few months.

Chapter 11:  Often referred to as a reorganization bankruptcy, this chapter of the U.S. Bankruptcy Code is primarily intended to assist ongoing businesses in restructuring their debts so they can continue to operate; however, it can be used by individuals or other entities under certain circumstances.  In Chapter 11, the bankruptcy debtor must file a plan of reorganization, obtain the acceptance of that plan from creditors, and then have the plan approved by the bankruptcy court.

Chapter 13:  The wage earner plan, this chapter of the U.S. Bankruptcy Code is available to individual filers only, unlike Chapters 7 and 11.  Under Chapter 13, the bankruptcy debtor files a plan for repayment of some or all of the outstanding debts.  Repayment takes place for a period of up to five years.  The bankruptcy debtor makes payments to a trustee appointed by the Bankruptcy Court and the trustee will distribute payments to creditors according to the repayment plan that is approved by the Bankruptcy Court.  Once all payments have been made,  the Bankruptcy Court will enter a discharge which is broader in scope than that available under Chapter 7.

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