What are the 2 common types of bankruptcy?

What are the 2 common types of bankruptcy?

More than likely, you would only be dealing with the two most common types of bankruptcies for individuals: Chapter 7 and Chapter 13. (A chapter just refers to the specific section of the U.S. Bankruptcy Code where the law is found.2) But we’ll take a look at each type so you’re familiar with the options.

What happens when a debtor is discharged from bankruptcy?

A discharge in bankruptcy protects a debtor from one mode of collection on a creditor’s claims. Namely, a discharge releases a debtor from personal liability on the debts subject to discharge. Basically, a discharge in bankruptcy gets rid of the possibility of an “action against the debtor in personam.” Johnson v.

Can a corporation be discharged in Chapter 7 bankruptcy?

Only individuals may receive a discharge in chapter 7 bankruptcy, so a corporation or partnership may only obtain a discharge in Chapter 11 bankruptcy proceedings; such discharges of business entities are subject to the limitations described in 11 U.S.C. § 1141 (d) (3).

When is student debt not subject to bankruptcy?

Student debt granted by the federal government is one type of debt that is non-dischargeable subject to 11 U.S.C. 523 (a). Even when a debtor is “honest but unfortunate” and therefore subject to bankruptcy, certain debts are not subject to discharge pursuant to 11 U.S.C. § 523 (a).

What kind of debt is subject to discharge?

See In re Lawson, 122 F.3d 1237, 1240 (9th Cir. 1997) (debtor denied discharge of all debts after debtor concealed assets with the intent to hinder, delay, or defraud creditors). Which Debts are Subject to Discharge? Student debt granted by the federal government is one type of debt that is non-dischargeable subject to 11 U.S.C. 523 (a).

What happens when a debtor files bankruptcy under Chapter 7?

Under bankruptcy law, when an individual debtor files a bankruptcy petition under Chapter 7 or Chapter 11, a separately taxable bankruptcy estate that consists of property formerly belonging to the debtor is created (11 U.S.C. §541 (a)).

How does the Bankruptcy Code protect the debtor?

The Bankruptcy Code allows an individual debtor (4) to protect some property from the claims of creditors because it is exempt under federal bankruptcy law or under the laws of the debtor’s home state. 11 U.S.C. § 522(b).

Who is responsible for filing taxes in a bankruptcy?

Upon the creation of the bankruptcy estate, the trustee or debtor in possession, as the case may be, becomes responsible for computing tax due and filing all required federal and state income tax returns on behalf of the bankruptcy estate during the bankruptcy case (Sec. 1398 (c) (1); 11 U.S.C. §1107).

Can a debt be discharged before filing for bankruptcy?

In short, among your dischargeable debt, only your debts that arose before the date of filing for Chapter 7 will be discharged. You will still be responsible for any debt you incur after filing your petition but before receiving a discharge. Example. Jessica fell behind on her electric bill before she filed for bankruptcy.