This is the second part of a blog that briefly summarizes the different types of bankruptcy. In addition to Chapter 7, Chapter 11, and Chapter 13, the Bankruptcy Code contains three additional chapters and types of bankruptcy: Chapter 9, Chapter 12, and Chapter 15. The first part of this blog discussed personal bankruptcies and the initial part of this blog will discuss the last available type of personal bankruptcy, Chapter 20.
Personal Bankruptcy – Chapter 20
Because some people who consider and file bankruptcy may have financial difficulties and issues that are not completely solved by either a Chapter 7 or Chapter 13 bankruptcy case, they may file what is considered a Chapter 20 case. This involves filing a Chapter 13 bankruptcy immediately after completing a Chapter 7 bankruptcy, under certain circumstances, which may provide more relief than filing a Chapter 7 case or Chapter 13 case by itself. Chapter 20 cases are complicated based on the legal requirements and timing issues. An experienced and knowledgeable bankruptcy attorney is necessary for situations that may require a Chapter 20 bankruptcy filing.
Business Bankruptcy – Chapter 7
Business organizations may file either a Chapter 7 or Chapter 11 bankruptcy case. Typically, businesses that file Chapter 7 bankruptcy cases are in the process of terminating operations and conducting a true liquidation. All business assets are sold or liquidated, and unsecured creditors are paid in order of priority. Businesses may not claim exemptions when filing Chapter 7 so every business asset is available for liquidation.
Business Bankruptcy – Chapter 11
A bankruptcy reorganization under Chapter 11 may be used to restructure the financial obligations of a business. Like in a Chapter 13 bankruptcy filing, the protection given by the automatic stay allows a business the opportunity to extensively reorganize assets and liabilities through a repayment plan.
Municipality Bankruptcy – Chapter 9
This type of bankruptcy case filing permits municipalities such as cities, towns, and villages, as well as counties, taxing districts, municipal utilities, and school districts to restructure their financial obligations. The Chapter 9 bankruptcy proceeding filed by the city of Detroit remains the largest municipal bankruptcy filing by debt as of 2020.
Farm Bankruptcy – Chapter 12
A “farm” bankruptcy under Chapter 12 allows family farmers and those operating commercial fishing operations a way to reorganize their debts without filing a more expensive and complicated Chapter 11 bankruptcy case. A chapter 12 bankruptcy case works similarly to a Chapter 13 reorganization but includes unique, specific provisions that consider the nature of farming and fishing operations. Once the Chapter 12 bankruptcy debtor files a repayment plan, it receives a bankruptcy discharge.
Foreign Bankruptcy – Chapter 15
This chapter of bankruptcy is only applicable when an individual or business files a bankruptcy case under the bankruptcy laws of another country but has assets and/or liabilities in the United States. The purpose of the laws contained in this chapter is to provide an efficient and effective way of addressing issues that transcend all of the nations involved and to ensure cooperation between all foreign and United States bankruptcy courts.
Theron Morrison and the Morrison Law Group may help any Utah resident better understand their bankruptcy options as the Morrison Law Group offers free consultations. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.
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