Chapter 11 bankruptcy allows a business to reorganize and refinance to be able to prevent final insolvency. Often there is no
trustee, but a "debtor in possession," and considerable time to present a plan of reorganization. Sometimes this works, but often it
is just a bottomless pit of more debt and delay. The final plan often requires creditors to take only a small percentage of the debts
due (what is owed them) or to take payment over a long period of time. Chapter 13 is similar to Chapter 11, but is for individuals to
work out payment schedules, which is more likely to be worthwhile. Upon adjudication (officially declared) as a bankrupt a party
cannot file for bankruptcy again for seven years.
Will Bankruptcy Wipe Out All My Debts?
Yes, with some exceptions. Bankruptcy will not normally wipe out:
(1) money owed for child support or alimony, fines, and some taxes;
(2) debts not listed on your bankruptcy petition;
(3) loans you got by knowingly giving false information to a creditor, who reasonable relied on it in making you the loan;
(4) debts resulting from "willful and malicious" harm;
(5) student loans owed to a school or government body, except if;
the loan first became due more than 7 years before the bankruptcy was filed or
the court decides that payment would be an undue hardship;
(6) mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any
additional money if the property is sold by the creditor).
What Can Bankruptcy Not Do?
Bankruptcy, however, cannot cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually
not possible to:
trustee, but a "debtor in possession," and considerable time to present a plan of reorganization. Sometimes this works, but often it
is just a bottomless pit of more debt and delay. The final plan often requires creditors to take only a small percentage of the debts
due (what is owed them) or to take payment over a long period of time. Chapter 13 is similar to Chapter 11, but is for individuals to
work out payment schedules, which is more likely to be worthwhile. Upon adjudication (officially declared) as a bankrupt a party
cannot file for bankruptcy again for seven years.
Will Bankruptcy Wipe Out All My Debts?
Yes, with some exceptions. Bankruptcy will not normally wipe out:
(1) money owed for child support or alimony, fines, and some taxes;
(2) debts not listed on your bankruptcy petition;
(3) loans you got by knowingly giving false information to a creditor, who reasonable relied on it in making you the loan;
(4) debts resulting from "willful and malicious" harm;
(5) student loans owed to a school or government body, except if;
the loan first became due more than 7 years before the bankruptcy was filed or
the court decides that payment would be an undue hardship;
(6) mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any
additional money if the property is sold by the creditor).
What Can Bankruptcy Not Do?
Bankruptcy, however, cannot cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually
not possible to:
- Eliminate certain rights of "secured" creditors. A "secured" creditor has taken a mortgage or other lien on property as
collateral for the loan. Common examples are car loans and home mortgages. You can force secured creditors to take
payment over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if
your property is taken. However, you generally cannot keep the collateral unless you continue to pay the debt.
- Discharge certain types of debts singled out by the bankruptcy law for special treatment such as child support, alimony,
some student loans, court restitution orders, criminal fines, and some taxes.
- Protect cosigners on your debts. When a relative or friend has co‑signed a loan, and the consumer discharges the loan in
bankruptcy, the cosigner may still have to repay all or part of the loan.
- Discharge debts that arise after bankruptcy has been filed.
| Bankruptcy explained |
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Bankruptcy is a legally declared inability or impairment of ability of an
individual or organization to pay their creditors. A declared state of
bankruptcy can be requested or initiated by the bankrupt individual or
organization, or it can be requested by creditors in an effort to recoup a
portion of what they are owed. However, in the overwhelming majority of
cases, the bankruptcy is initiated by the "bankrupt" individual or
organization.
Refers to statutes and judicial proceedings involving persons or
businesses that cannot pay their debts and seek the assistance of the
court in getting a fresh start. Under the protection of the bankruptcy court,
debtors may be released from or "discharged" from their debts, perhaps
by paying a portion of each debt. Bankruptcy judges preside over these
proceedings. The person with the debts is called the debtor and the
people or companies to whom the debtor owes money are called creditors
In a liquidation bankruptcy, some of your property may be sold to pay
down your debt. In return, most or all of your unsecured debts (that is,
debts for which collateral has not been pledged) will be erased. You get
to keep any property that is classified as "exempt" under the state or
federal laws available to you (such as your clothes, car, and household
furnishings). If you don't own much, chances are that all of your property
is exempt and you have what is known as a "no asset" case.
individual or organization to pay their creditors. A declared state of
bankruptcy can be requested or initiated by the bankrupt individual or
organization, or it can be requested by creditors in an effort to recoup a
portion of what they are owed. However, in the overwhelming majority of
cases, the bankruptcy is initiated by the "bankrupt" individual or
organization.
Refers to statutes and judicial proceedings involving persons or
businesses that cannot pay their debts and seek the assistance of the
court in getting a fresh start. Under the protection of the bankruptcy court,
debtors may be released from or "discharged" from their debts, perhaps
by paying a portion of each debt. Bankruptcy judges preside over these
proceedings. The person with the debts is called the debtor and the
people or companies to whom the debtor owes money are called creditors
In a liquidation bankruptcy, some of your property may be sold to pay
down your debt. In return, most or all of your unsecured debts (that is,
debts for which collateral has not been pledged) will be erased. You get
to keep any property that is classified as "exempt" under the state or
federal laws available to you (such as your clothes, car, and household
furnishings). If you don't own much, chances are that all of your property
is exempt and you have what is known as a "no asset" case.