Types of Bankruptcy in Nashville, Murfreesboro, Gallatin, Clarksville and Franklin, Tennessee
There are two basic types of debt, characterized in terms of the presence or absence of an underlying asset or collateral. A secured debt involves the presence of an asset—as, for example, when a bank loans money to someone who uses it to buy a house, then ends up falling into debt. His or her loan is backed by an asset--in this case the house--making it a secured debt. An unsecured debt is not secured by any underlying assets or collateral.
Just as different types of debt exist, so too do different types of bankruptcy. The types of bankruptcy are named for their respective chapters in the United States Bankruptcy Code. The type you file depends on many factors, including whether you are filing for a Nashville business bankruptcy or a Nashville personal bankruptcy. Four types of bankruptcy exist: Chapters 7, 11, 12, and 13. In Franklin, Chapters 7, 11, and 13 bankruptcy are the most common types.
Chapter 7
Also known as liquidation bankruptcy, Chapter 7 involves assigning a trustee to sell off all non-exempt assets that belong to the debtor, in order to repay debts to creditors to the fullest extent possible. Any portion of debt that cannot be paid back through liquidation becomes discharged, and any income that the debtor earns after filing for bankruptcy can be kept by the debtor. Personal bankruptcy in Clarksville is most frequently filed under Chapter 7, although corporations and partnerships are eligible as well.
Chapter 11
Business bankruptcy in Gallatin is commonly filed under Chapter 11, which is the most complex type of bankruptcy. Unlike Chapter 7, which makes it very difficult for corporations and partnerships to conduct business operations, Chapter 11 enables the debtor to continue functioning by maintaining ownership of all assets, and creating a reorganization plan for paying back creditors. After filing Chapter 11 bankruptcy, a business has 120 days to develop this reorganization and payment plan.
Chapter 13
Chapter 13 is similar to Chapter 11, but is designed for individuals. In addition to maintaining control and ownership of assets, the debtor works out a three- to five-year payment plan to pay back creditors. While there are limits on the amount of debt that can be involved in Chapter 13, it does offer an opportunity for some portion of the debt to be discharged, in accordance with the income of the debtor.
Chapter 7, 11, and 13 bankruptcies in Murfreesboro are the most frequently filed types of bankruptcy. Chapter 12 is geared specifically towards farm owners and is rarely employed, compared to the frequencies which Chapter 7, 11, 13 in Clarkson are filed. If you are preparing to file bankruptcy in Murfreesboro; Chapter 7, 11, and 13 attorneys can guide you through the process. Contact the law offices of Rothschild & Ausbrooks, PLLC today for a free initial consultation about your financial debt.
