| Bankruptcy
Overview
Bankruptcy is a federal system of statutes and laws which allow an honest person a fresh financial start.
Chapter 7:
This is what most people think of when they hear the
word bankruptcy. The idea is that you rid yourself of debts and
surrender your non-exempt property. (This is property that the
law says you can keep so you can obtain a fresh start – i.e. your
household goods, furniture, clothing, automobile, home, savings
and other property up to certain limits). The reality is that
you rarely surrender property and you do erase most of your debts.
Chapter 9:
This type of bankruptcy is for municipalities
such as school districts.
Chapter 11:
This type of banruptcy is a reorganization
mostly filed by large companies such as PG&E.
Chapter 12:
This type of bankruptcy is a reorganization plan for
farmers.
Chapter 13:
This is a plan in which an individual (or couple) repays all or
part of his or her debts. A Chapter 13 is commonly filed by people
who owe recent income taxes, are behind in car payments, or are
behind in home loan payments.
IMPORTANT
The new bankruptcy law went into
effect on October 17, 2005. Max Cline
is an expert on this new law, having recently served
on a panel with two bankruptcy judges to teach the new
law to bankruptcy attorneys.
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