The word ‘chapter’ has several meanings. For example, organizations often call individual groups ‘chapters.’ People often say they are starting a new chapter in their lives. Most books are divided into chapters. But the word is also used when people talk about bankruptcy, which can leave people confused. However, a North Carolina bankruptcy attorney can tell you what “chapter” means when it comes to bankruptcy.
The United States Bankruptcy Code
Federal statutes are organized and published as the United States Code. That, in turn, is divided into 53 broad sections. You can find bankruptcy laws at 11 U.S. Code Title 11, and this is where ‘chapters’ come in.
The 15 Chapters of the United States Bankruptcy Code are:
- Chapter 1 – General Provisions
- Chapter 2 – Case Administration
- Chapter 5 – Creditors, the Debtor, and the Estate
- Chapter 7 – Liquidation
- Chapter 9 – Adjustment of Debts of a Municipality
- Chapter 11 – Reorganization
- Chapter 12 – Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income
- Chapter 13 – Adjustment of Debts of an Individual with Regular Income
- Chapter 15 – Ancillary and Other Cross-Border Cases
The term “chapter” refers to a section of the United States Bankruptcy Code. Some chapters refer to specific types of bankruptcy cases like the most common: Chapter 7, Chapter 11, and Chapter 13. We will look at these next.
In this type of bankruptcy, the debtor sells certain assets to repay his or her debts. That’s one reason we call Chapter 7 the liquidation bankruptcy. However, it is important to note that some assets are exempt from liquidation.
The debtor in a Chapter 7 is usually concerned with:
- Keeping exempt property while
- Discharging as many debts as possible.
Not everyone is eligible to file a Chapter 7. However, other chapters are available.
Businesses might file a Chapter 11 bankruptcy to give them time to reorganize their debts. Many times, the business attempts to continue operating while paying creditors.
As with Chapter 7, not everyone is eligible to file Chapter 11. Also, there are some disadvantages to filing Chapter 11 that your North Carolina bankruptcy attorney can explain.
Many individuals prefer to file a Chapter 13 because:
- They get to keep most of their property, and
- They develop a repayment plan that allows them to pay back as much debt as possible.
After filing a Chapter 13 bankruptcy petition, the debtor works with a trustee or bankruptcy administrator. Along with the debtor’s attorney, they review the debtor’s assets, income, and debt. They also attend a meeting of the creditors at some point.
The court approves or rejects the debtor’s repayment plan. If approved, the debtor makes monthly payments until the plan is complete.
Many people feel a great sense of relief when filing a Chapter 13 bankruptcy. One reason for this is because an automatic stay goes into effect as soon as you file the petition. The stay stops most collection efforts. In most cases, debtors can work on their repayment plans free from creditor harassment.
Other Bankruptcy Chapters
Individual debtors do not commonly use the last three types of bankruptcy.
- A Chapter 9 is intended for financially-distressed cities, towns, counties, and school districts.
- Chapter 12 helps family farmers and fishermen burdened with debt.
- The newest chapter, Chapter 15, is for bankruptcies involving parties from more than one country.
You probably will not have to deal with these chapters. Once you talk with your attorney, however, you will have a better idea of which bankruptcy chapter is right for you.
As a North Carolina Bankruptcy Attorney, I Can Explain Bankruptcy to You
Let’s talk about the reasons you are considering bankruptcy. We may find several solutions, including filing a Chapter 13.
Attorney Leslie Craft has the experience you need to deal with bankruptcy. Ms. Craft’s goal is always to help her clients get past their legal problems and get on with their lives.
Bankruptcy doesn’t have to be a painful process. To schedule a free personal consultation, call Craft Law Offices at (252) 752-0297 or email us at firstname.lastname@example.org. My offices are located in Greenville, Morehead City, and Rocky Mount for your convenience. I also represent clients in surrounding Eastern North Carolina communities, including Warrenton, Elizabeth City, Roanoke Rapids, Goldsboro, and Jacksonville.