You think of filing for bankruptcy as a pretty simple prospect – once you get over the hurdle of recognizing that bankruptcy is the right solution for your bill problems, you think you’ll just go into some lawyer’s office and take they’ll print up some simple papers for you to sign and file.
Consider this – there are nine types of bankruptcy.
Nine.
Reed Allmand, in his Texas bankruptcy blog, outlines each of the nine types of bankruptcy in list format. They are:
- Chapter 7 Bankruptcy; often referred to as a liquidation. In this type of personal bankruptcy, assets can be sold off, or liquidated, in order to repay debts. An individual will have to undergo a “means test” to file this type of bankruptcy.
- Chapter 9 Bankruptcy; this type of bankruptcy has to do with cities or towns. This type of bankruptcy is very rare, and only a few instances are filed each year with federal courts.
- Chapter 10 Bankruptcy; this type of bankruptcy isn’t as popular as Chapter 11 bankruptcy, but it deals with small business reorganizations.
- Chapter 11 Bankruptcy; this is a very popular type of business reorganization bankruptcy. The company is typically reorganized while the debtor remains in control of the business.
- Chapter 12 Bankruptcy; another little known type of bankruptcy, it has to do with family owned farms. Only a family owned farm can file for Chapter 12, and the farm must have less than $1.5 million in debt.
- Chapter 13 Bankruptcy; a very popular type of personal bankruptcy in which debts are reorganized. A repayment plan is developed in which the debtor repays its debts over a three to five year period. Typically individuals keep their cars and homes.
- Chapter 20 Bankruptcy; this is a slang term for someone who files for Chapter 7 bankruptcy shortly after filing for Chapter 13 bankruptcy.
- Chapter 22 Bankruptcy; another slang term describing a company that has filed for Chapter 11 bankruptcy twice.
- Chapter 33 Bankruptcy; similar to Chapter 22 bankruptcy, but it is used to describe a company that has filed for Chapter 11 bankruptcy 3 times
Reed doesn’t mention Chapter 15, but that’s OK because it deals with certain kinds of international bankruptcy cases.
Chances are pretty good that you’re not going to file for Chapter 11 bankruptcy unless you’re a business, and Chapter 12 is out the door unless you’re a farmer (not too many of those in New York City, but on Long Island and north of New York City there are a lot of farms in New York), so that narrows down the field of play to just a few types of bankruptcy.
Still, it’s instructive to see the menu of choices available. And to realize that when you visit a lawyer to learn about your options, that attorney needs to do more than just push some paper around his or her desk to get you to where you need to go.
Photo courtesy of oschene.
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