Laws Protecting Debtors/Creditors and Bankruptcy Unit C Basic Business Law Objective 6.02 Part D

Notice of debt payment to be recorded Notice of debt payment to be recorded Request receipt Request receipt Canceled checks Canceled checks Bankruptcy Bankruptcy Chapter 7 Chapter 7 Chapter 11 Chapter 11 Chapter 13 Chapter 13 Chapter 12 Chapter 12 Laws Protecting Debtors

Bankruptcy Chapter 7 – Liquidation Chapter 7 – Liquidation Sale of nonexempt property for cash Sale of nonexempt property for cash Nonexempt property Nonexempt property Bank Accounts Bank Accounts Stocks Stocks Bonds Bonds

1. File the following with the court: a. List of all creditors and amounts owed b. List of all property owned c. Statement about financial affairs d. List of current income and expenses 2. Trustee is selected 3. Assets liquidated 4. Proceeds used to pay creditors 5. Money left over returned to debtor Chapter 7 Bankruptcy Procedure

Chapter 11 Reorganization Chapter 11 Reorganization Business can keep operating Business can keep operating Files plan of reorganization Files plan of reorganization Court approves plan Court approves plan Bankruptcy

Bankruptcy Chapter 12 Chapter 12 Used for Family Farmers wishing to make a debt adjustment to save the business Used for Family Farmers wishing to make a debt adjustment to save the business Debt Ceiling $1.5 million Debt Ceiling $1.5 million Debt plan is for 3 years with a possibility of a 2 year extension Debt plan is for 3 years with a possibility of a 2 year extension

Chapter 13 Extended Time Payment Plan Chapter 13 Extended Time Payment Plan Applies to individuals with regular income Applies to individuals with regular income Unsecured debts less than $250,000 and/or secured debts of less than $750,000 Unsecured debts less than $250,000 and/or secured debts of less than $750,000 Submit plan for repayment of debts within three years Submit plan for repayment of debts within three years May be extended to five years May be extended to five years Creditors cannot file suit Creditors cannot file suit Bankruptcy