Bankruptcy
...ation" caseses, and may be filed by an individual, corporation, or a partnership. Under chapter 7, a trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property as exempt. In exchange for this, the debtor gets a discharge, which means that the dbtor does not have to pay certain types of debts. Corporations and partner- ships do not receive discharges. Consequently, any individuals legally liable for the partnership's or corporation's debts will remain liable. Therefore, individual bankruptcies may be required as well as the corporation or partnership bankruptcy. Chapter 12 offers bankruptcy relief to those who qualify as family farmers. There are debt limitations for chapter 12, and a certain portion of the debtor's income must come from the operation of a farming business. Family farmers must propose a plan to repay their creditors over a period of time from future income and it must be approved by the court. Plan payments are made through a chapter 12 trustee who also monitors the debtor's farming operations while the case is pending. Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,000,000 ($250,000 in unsecured debts and $750,000 in secured debts), including individuals who operate businesses as sole proprietorships. It is not availalbe to corporations or partnerships. Chapter 13 generally permits individuals to keep their property by repaying creditors out of their future income. Each chapter 13 debtor proposes a repayment plan which must be approved by the court. The amounts set forth in teh plan must be paid to the chapter 13 trustee who distributes the funds for a small fee. Many debts that cannot be discharged can still be paid over time in a chapter 13 plan. After completion of payments under the plan, chapter 13 debtors recieve a discharge of most debts. The differences between Chapters 7 and 13. Chapter 7 is often called full bankrupcy, and Chapter 13 is often called a wage earner plan. The main difference is that in Chapter 7 the bills are wiped out right away with a court order, and you don't pay anything on them, while in Chapter 13 you make payments for 3-5 years although you do not necessarily have to pay them in full. Both Chapter 7 and Chapter 13 end with a court order that says you don't owe the bills anymore. People often mistakenly believe you have to pay your debts in full in Chapter 13. Actually you are only required to pay what you can reasonably pay for at least 3 years to get out of debt in Chapter 13. Under Chapter 13 you can catch up on your home morgage,...