The three most common types of bankruptcy filings in the United States include Chapter 7, Chapter 13, and Chapter 11.
Chapter 12 (for farmers) and Chapter 9 (for municipalities) are also available under the current Bankruptcy Code. 11 U.S.C. §109 dictates who may be a debtor under each Chapter. The most commonly filed bankruptcy case for an individual is a Chapter 7. Although some businesses file Chapter 7 cases, they are not as common because a business does not receive a discharge of its debts under a Chapter 7 case, and being discharged, or relieved of debt, is the primary purpose of Chapter 7.
Most individuals and businesses, with the exception of railroads, insurance companies, and certain financial institutions, may be eligible for Chapter 7. In most cases, a Chapter 7 case will last approximately four (4) months. The same forms are used to file Chapter 7, Chapter 9, Chapter 11, Chapter 12, and Chapter 13. Much of the same information is required in order to file any type of bankruptcy. In each case, the Bankruptcy Rules require the Debtor to appear at a Section 341 Meeting of Creditors within 45 days of filing. Generally these meetings will occur within 30-45 days of the filing.
Although the same forms are used regardless of the Chapter that is filed, the different bankruptcy Chapters are vastly different. For example, in most cases, a Chapter 7 case generally lasts approximately four months. To the contrary, a Chapter 13 case typically lasts five years. A Chapter 11 case typically lasts three to ten years, depending on the intricacies of the case.
Businesses and individual debtors whose debts are primarily business debts are generally eligible to file Chapter 7. Individuals with primarily consumer debts must first pass a “means test” in order to be eligible for Chapter 7. This test ensures that their income is not too great, that their secured debt is too small, and takes into consideration other factors to determine whether or not an individual may qualify.
If you have questions about whether Chapter 7 is right for you, contact our office where you will speak to one of our experienced and qualified attorneys to discuss with you your situation. Matthew L. Johnson is one of approximately eleven attorneys in the State of Nevada who is Board Certified in Business Bankruptcy Law by the American Board of Certification, and is Certified as a Specialist by the State Bar of Nevada.