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?
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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?
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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?
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Individuals repay debts over three to five years through a court-approved payment plan while keeping assets.- What is Chapter 12 bankruptcy designed for?
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Family farmers and fishermen to reorganize and repay debts while retaining the farm or fishing operation.- What is an automatic stay in bankruptcy?
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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?
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Lawsuits, wage garnishments, foreclosures, evictions, collection calls, and repossession of property.- What is a debtor-in-possession?
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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?
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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?
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Collects monthly payments from the debtor and distributes them to creditors according to the approved payment plan.- What is a Section 341 meeting?
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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?
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A court order that releases the debtor from personal liability on qualifying debts, allowing a fresh start.- What is an unsecured debt?
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A debt not backed by collateral or security, such as credit card debt, medical bills, or personal loans.- What is a secured debt?
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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?
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Student loans, recent taxes, child support, alimony, and debts incurred by fraud.- What must an individual debtor file to initiate bankruptcy?
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A petition including schedules of assets, liabilities, income, expenses, contracts, and a statement of financial affairs.
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