Understanding the Different Bankruptcy Chapters
Good afternoon, everybody. Edward Kelly, your OKC bankruptcy lawyer here with another three minutes to financial freedom. And here’s a question I get sometimes. What are all the various chapters of bankruptcy? And I’m going to answer that, or I’m going to partially answer that.
There are several chapters that you may never hear of and won’t pertain to you, but I’ll give you the three that you hear about. Chapter 7, that’s the one you want to do if you can. That’s a personal liquidation. It means you’re getting rid of all unprotected assets in exchange for wiping out all of your dischargeable debt. And 90 days start to finish, filing to discharge in an ideal situation, this is what you want to do. If you’re not going to lose property that you want to keep, and if you’re going to get rid of debt that you want to get rid of.
What’s the next one? Chapter 13. So this is kind of a hybrid personal reorganization slash liquidation. So again, your assets that are not protected are up for grabs, either to be liquidated, or if you want to keep them, you’ve got to pay their value into your chapter 13 plan. And as you know, chapter 13 means you pay what you can, not what you owe for five years. And at the end of it, any remaining debt is discharged, just like it would be in a seven. So it’s much more involved than a seven, but can result in a similar outcome.
Business Reorganization
So when I say chapter 13 is like, can be a personal reorganization. For example, that’s if you’re trying to save your home or save a car or something you’re behind on an asset that you’re way behind on payments. But you want to force the lender to allow you to catch up. So that can be a form of a personal reorganization. And also a liquidation, because you may be behind on your mortgage and have a bunch of credit card debt. And maybe all of your disposable income, meaning what you can pay, is needed to catch up the house. Then all the credit card debt will be liquidated upon a successful completion of the plan.
Last, you probably heard of chapter 11. That’s the one that makes the news. Your big companies, your Chesapeake and so forth. That is a business reorganization. So it is a whole other ballgame. It can often take years, sometimes decades to complete. And that’s when a big company basically teams up with its creditors, the people it owes money to, to come up with a plan to keep it alive and save it. We’ll talk about that in another video, but that’s what that refers to.
Now there is now a new sub-chapter of chapter 11 for small businesses, assets of a million or under. And that is a field some of you may be interested in. If you’re a small LLC or small corporation and you fit into that sub-chapter, it really streamlines it, makes it cheaper and more affordable and possible. So if you want more information about that, we’ll talk about that another day. You can reach out to me at oklahomacitybankruptcyattorney.pro.
Get a Free Consultation
We’ll be back tomorrow with another three minutes to financial freedom. If you have any questions or need assistance with your bankruptcy case, feel free to contact me, a debt attorney in Oklahoma, at oklahomacitybankruptcyattorney.pro. I offer a free consultation to discuss your situation and provide guidance on the best course of action. Don’t hesitate to reach out and take the first step towards financial freedom.