Creditor Rights in Bankruptcy

Bankruptcy is a method for settling debts that is governed by federal law. It's used by individuals or business entities that are unable to pay debts as they become due. The process is meant to benefit both debtors and creditors. Debtors are able to restructure or relieve debts they can't pay, while creditors are allowed to collect some of what they're owed.

Our federal Bankruptcy Code is found in Title 11 of the United States Code. Because this is federal law, bankruptcy generally works the same from state to state. Occasionally, different states have slightly different laws regarding what types of property can be exempt from bankruptcy proceedings.

Bankruptcy is a legal method for settling debts. The goal is for debtors to restructure or relieve debts they can't pay, while allowing creditors to collect at least a portion of the payment they're owed.

There are three main types of bankruptcy proceedings:

• Chapter 7 is a liquidation proceeding used mostly for individuals and the most common type of bankruptcy proceeding.
• Chapter 13 is less common and is a repayment plan used for individuals with a regular source of income who make too much to qualify for Chapter 7 but don't have too much debt.
• Chapter 11 is a reorganization of debt for insolvent businesses that want to remain in operation.

1. Greg wants to file bankruptcy. He wants to keep all of his assets, though his house is in foreclosure. He owes $200,000 on his house and $100,000 in unsecured debt, but has a regular salary of almost $30,000 a year. Which chapter of bankruptcy is Greg likely use?

1. Chapter 13
2. Chapter 7
3. Chapter 11

Either Chapter 7 or 13 could apply

2. Maria wants to file bankruptcy for her business, Maria's Manicures. She's closing the business completely and wants to completely liquidate the assets. She doesn't plan to re-open. Maria will use _____ bankruptcy.

1. Either Chapter 7 or 13 could apply
2. Chapter 13
3. Chapter 7
4. Chapter 11

Link below. Use google search to research

https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics#:~:text=A%20case%20filed%20under%20chapter,court%20approval%2C%20borrow%20new%20money.