Bankruptcy chapters and the basic process of business bankruptcy from an intro business law course.
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- What is the main purpose of Chapter 7 bankruptcy?
- Complete liquidation of debtor's non-exempt assets to pay creditors, followed by discharge of remaining debts.
- What is the main purpose of Chapter 11 bankruptcy?
- Reorganization of a business to continue operating while restructuring debt through a plan approved by creditors and court.
- What is the main purpose of Chapter 13 bankruptcy?
- Individuals repay debts over three to five years through a court-approved payment plan while keeping assets.
- What is Chapter 12 bankruptcy designed for?
- Family farmers and fishermen to reorganize and repay debts while retaining the farm or fishing operation.
- What is an automatic stay in bankruptcy?
- A court order that stops most creditors from continuing collection efforts against the debtor or the bankruptcy estate.
- What activities does the automatic stay typically prevent?
- Lawsuits, wage garnishments, foreclosures, evictions, collection calls, and repossession of property.
- What is a debtor-in-possession?
- A debtor in Chapter 11 who remains in control of the business and its assets rather than having a trustee manage them.
- What are the main duties of a Chapter 7 trustee?
- Liquidate non-exempt assets, distribute proceeds to creditors according to priority, and challenge improper pre-bankruptcy transfers.
- What role does a trustee play in Chapter 13 bankruptcy?
- Collects monthly payments from the debtor and distributes them to creditors according to the approved payment plan.
- What is a Section 341 meeting?
- A meeting of creditors held shortly after bankruptcy filing where the debtor answers questions under oath about finances and assets.
- What does discharge mean in bankruptcy?
- A court order that releases the debtor from personal liability on qualifying debts, allowing a fresh start.
- What is an unsecured debt?
- A debt not backed by collateral or security, such as credit card debt, medical bills, or personal loans.
- What is a secured debt?
- A debt backed by collateral, such as a home mortgage or car loan, where the creditor can repossess the property if unpaid.
- Which types of debts are typically non-dischargeable in Chapter 7?
- Student loans, recent taxes, child support, alimony, and debts incurred by fraud.
- What must an individual debtor file to initiate bankruptcy?
- A petition including schedules of assets, liabilities, income, expenses, contracts, and a statement of financial affairs.
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