1. US bankruptcy code is very specific
regarding how to file bankruptcy.
Bankruptcy Information
2. Bankruptcy code is very confusing and deals with all of the many different
types of bankruptcy that a business or person can file It's important to
note that even though people can file different bankruptcy forms, there is
still only one main bankruptcy code which deals with all of the different
types of bankruptcy in the United States
3. By "filing chapter 11", or "filing chapter 7", the company is just filing
under which chapter of the code best fits its situation There are several
major differences between the chapters that are in bankruptcy code
4. For instance, there is a difference between the two most common
chapters for bankruptcy filings Chapter 7 is also called "liquidation" and
what happens in this chapter is that all of the extra assets of that
company or person are sold off in order to pay most of the outstanding
debts
5. Everything that can be sold for this purpose will be sold, and the debtor
will only be left with the few items that can be held back due to
exemptions Something important to consider about chapter 7 bankruptcy
is that the person will still have enough exempted items to hopefully put
his or her life back together
6. This type of bankruptcy is most common when the person in question
does not have the resources necessary to pay off his or her debts
Bankruptcy code both explains exactly how to legally go about putting
this type of bankruptcy into effect as well as mentioning any special tax
Bankruptcy Information provisions that might apply in this case
7. The other chapters that are commonly filed under in US bankruptcy code
include chapter 11, which is reorganization - basically reorganizing the
business or financial situation so that it is possible to pay off all debts in
the future The other two types of bankruptcy are not filed by businesses -
chapter 12 is specific to farmers who have personal debts, and chapter
13 is specific to other people with personal debts
8. In order to file under any of these three chapters, you or your company
must have a steady income, and be able to prove this
9. Once it is proven, your finances will be reorganized so that you can pay
off your debts and eventually improve your credit rating
