As for the person in debt and filling for bankruptcy, their involvement with the bankruptcy judge is usually very limited. A typical chapter 7 debtor will not appear in court or see the bankruptcy judge unless an objection is raised. A chapter 13 debtor may only have to appear before the bankruptcy judge at a confirmation hearing. Usually, the only formal proceeding at which a debtor must appear is the meeting of creditors, which is usually held at the offices of the U.S. trustee.
Let’s further explore bankruptcy chapters 7,11, and 13. In chapter 7 bankruptcy, the bankruptcy trustee cancels most if not the debtor’s entire debit. In return, the trustee may sell/ liquidate some or all of the debtor’s property in order to repay the creditors. In the case of a business, business ceases to operate and shuts down. The chapter 7 process takes about four to six months to complete, and requires typically only one trip to the courthouse. The debtor will need to complete credit counseling as well. Chapter 11 bankruptcy is typically used for small businesses or major corporations. Usually small businesses shy away from Chapter 11, because it is expensive, risky, time-consuming, and complex. Although Chapter 11 is the only option for debtors who want to claim bankruptcy but owe too much money to meet chapter 13’s requirements. However, chapter 11 bankruptcy is the only form of bankruptcy that will allow a business to remain operating. They do this by restructuring their finances, which must be approved by the bankruptcy court. By reducing obligations and modifying payment terms, a Chapter 11 plan can help a debtor balance its income and expenses, regain profitability, and remain open. Furthermore, a debtor can sell some or all of its assets so it can downsize its business if necessary or pay down claims that it owes. Chapter 13 bankruptcy allows the debtor to keep their property. However, the debtor must be able to pay back some if not all of their debts over a three to five-year period. A debtor must make sure that they will be able to repay some or all of their debts before filling for chapter 13 bankruptcy, and they will need to prove that repayment can be made to the court. If a debtor’s income is irregular or too low, the court might not allow you to file for Chapter 13. On the contrary, if a debtor’s debit is to high, then the court may find them ineligible for chapter 13 as well. Also, debtors will need to receive credit counseling.
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