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Bankruptcy Filing Process

Updated on December 15, 2011

Bankruptcy Filing Process

In the United States, bankruptcy filing is under Federal jurisdiction via the Constitution. Uniform bankruptcy laws are applied to each state.

While bankruptcy cases often depend on state laws, usually regarding claims and exemptions, cases are filed in a United States Bankruptcy Court. State laws can prevent you from generalizing about cases.

To gain relief from debt, debtors file bankruptcy. Those debts are either discharged or paid off through a repayment plan. Usually a case begins when the debtor files a voluntary petition.

There are six types of bankruptcy:

· Chapter 7

· Chapter 9

· Chapter 11

· Chapter 12

· Chapter 13

· Chapter 15

Chapter 7 and Chapter 13 are filed in personal bankruptcy cases. Most cases in America are filed under Chapter 7. Corporations file under Chapter 7 or Chapter 11.

With Chapter 7, a trustee is appointed who liquidates non-exempt debtor property. The proceeds are distributed to the debtor’s creditors. Some debt is discharged, and the debtor retains exempt property. Property exemptions vary from state to state.

Debtors sometimes must use Chapter 13 filings. Sometimes the debtor prefers to do so. In Chapter 13, the debtor keeps his or her property but must participate in a repayment plan. That plan usually covers three to five years, and debts must be limited to qualify for Chapter 13.

Chapters 9, 11, 12 and 15 generally provide debt relief for organizations or foreign individuals.

You should seek legal advice on the best filing option.

You can obtain all of the appropriate forms online. These are Microsoft Word forms or sometimes Adobe Acrobat forms. There is also bankruptcy software available to assist in filing.

After filing you will receive a notice for a hearing. Creditors and the court may question you about your filing. At this point, in Chapter 13, a repayment plan is created. Once you complete this plan, your debts are discharged.

Bankruptcy will give the fresh start you probably have been seeking.


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