by Tanya Davis
If you have never filed bankruptcy before, the system can seem like a maze. There are federal procedures that must be followed, and special bankruptcy courts that are separate from your regular county courts. When most people think about filing bankruptcy, they are thinking of Chapter 7 or Chapter 13. These have to do with individuals either liquidating assets and selling them off, or creating a plan to repay the debts you owe over time. But there are several other types of bankruptcy: chapter 11, 12, 9, and 15. Let’s take a look at them.Chapter 11
Chapter 11 is often referred to as a “reorganization,” as it is used to reorganize a business or corporation. The case will involve the business and personal assets if it is a sole proprietorship, but for corporations and partnerships the business is considered separate from the individuals’ assets. The filing fee is $1,000 and there is an additional $39 “miscellaneous administrative fee.”
The U.S. trustee oversees the progress and the administration of the Chapter 11 reorganization. The court also monitors reimbursement requests and disclosure statements. Because these cases can go on for years, the debtor must pay a quarterly fee to the U.S. court until the case is either converted or dismissed. This fee may be $250 to $10,000.
Chapter 12
Chapter 12 bankruptcy is especially designed for family farmers and fishermen who have become financially burdened. It helps them to create a repayment plan so that they can pay back their creditors over a three to five-year period. The farmers or fishermen are required to meet all four criteria:
- They must be involved in a farming or fishing business
- Their total secured plus unsecured debts must not exceed $3,237,000 for farmers or $1,500,000 for fishermen
- Total debts that are fixed in amount must be 50% related to the farm or 80% related to the fishing operation.
- At least half the gross income for the preceding tax year must have come from this business. (For farmers, each of the second and third prior tax years)
Chapter 12 fees include a $200 filing fee and the $39 “miscellaneous administrative fee” mentioned above. Within 20 to 35 days after filing, there will be a meeting of creditors for the debtor to answer questions and discuss the terms of the repayment plan. The plan is then submitted to the court for approval. Payments are made directly to the court, with the trustee distributing the funds to the creditors.
Chapter 9
This is a type of bankruptcy specifically created for municipalities, to protect them from creditors while they develop and negotiate a debt plan. The municipality could be a city, county, township, school district, or a public improvement district. Like other types of debtors, the municipality must file a list of creditors with the court. But unlike other bankruptcies, cases filed under chapter 9 are not assigned automatically to a judge. Instead, the chief judge carefully designates which judge will oversee the case. This helps to keep the case from becoming politically charged.
Chapter 15
Chapter 15 bankruptcy is related to the “Model Law,” adopted from the U.N.’s Commission on International Trade Law. It has been adopted as part of the U.S. Bankruptcy Code and is meant to set out requirements for cross-border insolvency cases. More than 50 countries and organizations helped develop the Model Law, and many countries have agreed to cooperate in it.
Basically the Model Law states that the proceeding should take place in the debtor’s main country of operation. It directs courts to cooperate as much as they can in order to increase the possibilities of cross-border commerce. The Model Law allows for the local court to have the final say as to whether they are satisfied with the administration of assets.
tes which judge will oversee the case. This helps to keep the case from becoming politically charged.
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