Liquidating chapter 11 discharge
Debtors in Chapter 11 have the right to file a reorganization plan for the first 120 after filing the case, which must include a disclosure statement to creditors with enough information to help them evaluate the plan.Under Chapter 11, the debtor may trim its debts through a combination of repaying some debts and discharging others entirely.Major changes to the Bankruptcy Code in 2005 included the requirement of a "means test" to determine eligibility for personal bankruptcy under Chapter 7.The test determines whether or not the debtor has too much income for this type of filing.Chapter 13 Chapter 13 Bankruptcy is titled "Adjustment of Debts of an Individual with Regular Income." Unlike Chapter 7, Chapter 13 is best suited to debtors with regular income.Those who file under Chapter 13 typically are able to hold onto valuable assets, such as a house and car.The informal meeting of the creditors (also called a "341 meeting," based on Section 341 of the Code) is typically held at the trustee's office. Supreme Court decision described bankruptcy's role as follows: [I]t gives to the honest but unfortunate debtor a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt. Truth is, bankruptcy can mean different things to different debtors.Bankruptcy's Main Goal Federal bankruptcy laws are intended to allow debtors a way out of particularly heavy debts, giving consumers and businesses a fresh start where all other options have failed. There are several types of bankruptcy provided under the U. Bankruptcy Code, each with its own rules and procedures: Chapter 7 Chapter 7 Bankruptcy is titled "Liquidation" in the Code, since most of the debtor's assets are sold for cash (or "liquidated") and used to pay creditors.
Next Steps: Learn More About Your Bankruptcy Options With an Attorney Bankruptcy can be a confusing area of the law.Between all the different Chapters and rules, it isn't uncommon to feel a bit overwhelmed when deciding whether bankruptcy is right for you.The good news is that you don't need to learn about this on your own.Specifically, the Nelson Act gave companies the option of discharging debts but did extend those same protections to consumers. The Federal Rules of Bankruptcy Procedure (or simply "Bankruptcy Rules"), created by the U. How Bankruptcy Courts Work While most court cases are heard in either civil or criminal court, bankruptcy has a dedicated system of courts throughout the country. United States bankruptcy judges have the authority to make binding decisions in bankruptcy cases, such as eligibility issues or whether to grant a debt discharge.