Bankruptcy is a proceeding commenced in the Federal Court System that allows individuals and businesses to resolve their debt burdens. Debtors can utilize a liquidation of assets or a reorganization of their debts.
The most common bankruptcy proceedings for individual debtors are Chapter 7 and Chapter 13.
A Chapter 7 is known as a liquidation. The debtor surrenders to the Court any non-exempt property which is transferred or sold to generate funds to be distributed to the creditors. Learn more about our Chapter 7 bankruptcy practice.
A Chapter 13 is a reorganization. This proceeding allows the debtor to propose a repayment plan that lasts 3 – 5 years in which the creditors are paid over the life of the plan. Learn more about our Chapter 13 bankruptcy practice.
Both Chapters allow an individual to be discharged of their debts, even if certain debts have not been paid in full. If there is any terminology that you don’t understand, feel free to consult our Bankruptcy Glossary.