Concerning personal bankruptcy, generally, the two alternatives most frequently used are Chapter 7 or Chapter 13. Chapter 7 is generally filed by people who do not own a home (e.g., renters), and they simply agree to liquidate their assets for the benefit of their creditors. A husband and wife may file a joint petition. A Chapter 7 trustee is appointed from a panel of trustees by the Office of The United States Trustee. The debtor is allowed to exempt certain property from liquidation. Usually, there is a homestead exemption, and an exemption for certain personal property. There used to be a federal exemption that applied to everyone. Now, however, each state has the choice of "opting out", and many states have done so. The most lenient states for a debtor are Texas and Florida. For example in Texas, a debtor may exempt its primary homestead for an unlimited value (Gov. Connalley kept his range worth millions) and in Florida, Bowie Kuhn, Baseball Commissioner and big time lawyer, went to Florida a few weeks before filling to buy a house worth worth over $10 million). Compared to New York, a couple may exempt only $20,000 for a homestead exemption. Not exactly uniform protection for all Americans. After a discharge is obtained, the debtor cannot refile again for 7 years.
In a chapter 13 case, a trustee is appointed but the debtor's property is not liquidated. Generally, a chapter 13 debtor owns a home and is a wage earner, or is someone with a steady source of income. The debtor wants to save the home, and so proposes to pay back as much as it can over a three year period to its creditors. The debtor may propose a three year plan in which it can reinstate an accelerated mortgage on the primary residence, and use its future wages to propose a plan to pay its unsecured creditors, usually having to pay a minimum of at least 10% for the plan to be confirmed by the court. In certain cases, a plan can have a five year term. The debtor usually makes monthly payments under the plan, distributed by the trustee to the creditors.
Some individuals can file a chapter 11 plan, but this is not common. It is done by individuals who have complex holdings, usually real estate, that is not owned in a corporate structure. Like chapter 13, the goal is not liquidation, but reorganization. Generally, however, chapter 11 is filed by corporate, not individual debtors.
The foregoing is general information and should not be relied on as LEGAL ADVICE!!
Henry C.K. Liu
JKSCHW at aol.com wrote:
> In a message dated 98-12-13 00:34:13 EST, you write:
>
> << Doug will know the details, but I thought I'd throw in a footnote: a
> friend of mine, a woman in the depressive manic depressive support
> group, badly needs to file for bankruptcy -- but she can't afford the
> filing fee charged in Illimois.
>
> It's a curious fact that you can be too brokew to bankrupt. You cannot be too
> broke to marry or divorce, because these are fundamental rights under the 14th
> Amendment, so the government must waive filing fees. But the S.Ct has ruled in
> its wisdom that since bankruptcy is a not a fundamenatl right, you do not
> havea constitutional right to have them waive the filing fees. --jks