Bankruptcy is a traumatic experience to have to go through for most people. In the United States bankruptcy is under federal jurisdiction-as per the United States Constitution, Article 1, Section 8, clause 4. There are varying ‘chapters’ of the bankruptcy laws, namely chapters, 7, 9 11, 12, 13 and 15.
Chapters and their Subjects
Chapter 7 of the bankruptcy laws pertain to the basic liquidation of businesses or individuals-‘Straight Bankruptcy’-whereby it is the most simplistic and easiest form available. Chapter 9 concentrates on municipal bankruptcy whereby the resolution of municipal debts are taken care of.
In chapter 11-one of the most common forms of bankruptcy for corporations-the reorganization and rehabilitation of the company is the main objective. The company is generally reorganized, cutting costs, closing stores or branches, and reallocating labor to regenerate funds and re-establish the company without completely liquidating it.
Chapter 12 is one of the lesser known areas of bankruptcy which concentrates on fishermen and family farmers. Chapter 13 focuses on individual payment planes for those who still have a regular income and are able to at least contribute something to their debts and chapter 15 focuses on international and ancillary cases.
Choosing the Right Course of Action
If you are facing bankruptcy in Charles Town, WV, for instance, your attorney will have to understand all the federal laws around bankruptcy and represent you in the most preferable choice. You may be told which course of action would save you the most amount of money, but everything depends on the type of bankruptcy you are most suitable for. Your circumstances, as to whether you are an individual, a business owner or a corporation owner depend largely on the type of bankruptcy that is applicable to you.
Many large businesses opt for chapter 11 because it gives them the option to completely rearrange their internal affairs, business management methods and all the issues that put them in financial difficulty. Many a time a corporation will be offered a merger or a buy-out from another company and will help them to get out of their troubles. However, if that is not an option, the chapter 11 will give them the chance to start over.
