To File for Bankruptcy Under the Right Chapter, It's Essential to Know What They Entail
Every individual, family, or business has a unique history, abilities, and needs. It's for this reason that the government recognizes several types of bankruptcy filings. Though Chapter 7 and 13 are by far the most popular types of filings for individuals, with Chapter 7, alone, accounting for 65% of all cases, there exist a variety of alternate chapters for both individuals and businesses. This diversity of options has been brought about by the fact that the unique characteristics of certain vocational fields or industries, as well as specific problems that are encountered by large businesses, make what are generally thought of as protections for consumers under Chapters 7 and 13 inconsistent with what bankruptcy filings involving non-consumer debt might entail. It's often as essential, and as wise, for individuals and enterprises that might fall under these parameters to file for bankruptcy as it is for individual consumers, however.
Among non-Chapter 7 or 13 bankruptcies, an often unheard of option is Chapter 12. Created in response to the effect the multiple bank failures of the early 1980s had on farmers, including a credit tightening, this chapter specifically addresses the unique credit and lending needs of individuals engaged in family farming and fishing. Though initially added to the Bankruptcy Code as a result of the Bankruptcy Judges, United States Trustees, and Family Farmer Bankruptcy Act of 1986, it was finally codified as a permanent part of bankruptcy law with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Though it still specifically deals with farming and fishing, it is of particular note due to the rise of independent, organic farms in the last decade. As many of these are essentially ventures that have had to start with generous loans during a period of economic instability, the chances that they may have to file for bankruptcy, and therefore might be interested in information regarding Chapter 12, has increased in recent years. Given that many such farms are found near urban centers, Chapter 12 is of possible importance even to family operations that are found in or near cities like Chicago.
Another form of bankruptcy petition that is gaining in importance is Chapter 15. Designed specifically to deal with cases that involve insolvencies that affect entities across international borders, Chapter 15 occasionally affects individuals who may be involved with real estate, trade, or who may have assets in other nations.
Finally, though Chapter 11 generally involves the reorganization of businesses and other large corporate enterprises, it is occasionally filed by individuals with large debts or extensive assets. Though the most visible and publicized Chapter 11 filings often involve celebrities like popular musicians or entertainers who essentially manage a personal brand and business, it is also often sought after by less conspicuous, albeit extensive, estates.
No matter what type of bankruptcy an individual chooses to pursue, however, our experienced attorneys are happy to give them all the guidance and representation that is needed to increase the likelihood of a positive outcome. It's for this reason that anyone who is worried about their debts should talk to someone from our offices before they file for bankruptcy.