Bankruptcy Essay Example | Topics and Well Written Essays - 500 words

Bankruptcy - Essay Example Chapter 7 Bankruptcy is also known as straight bankruptcy in which an individual or a corporation will discharge the filing defaulter in exchange for giving up assets. Therefore, the chapter 7 is legislated specifically for people who cannot afford or who are unable to pay their debt. Accordingly, one chief reason people choose to file chapter 7 is that if one qualifies, he or she can then afford the monthly reimbursement for the items they wish to keep. This is unlike chapter 13 because those who file chapter 7 debtors are often ready to credit score more quickly because they aim to complete bankruptcy suit swiftly (Gambrell & Associates, n.d.). As with Chapter 13 on the other hand, the debtor is demanded to reimburse all or part of his/her debts in terms of reduction of upcoming income within a stipulated period of 3-5 years as per chapter 13 arrangement. Much of the debt that is not reimbursed as set out in the agreement or a plan of reorganization will have to be wiped out or discharged. This is unlike in chapter 7 where bankruptcy does not discharge much of the mortgage, for if debtor desires to keep an item product e.g. an apartment or a car as security for a loan, he is required to prolong these payments. However, under chapter 13, nearly all long-term debts and mortgages have to be paid in their usual monthly reimbursement either during or outside the plan, apart from for the payments that were due ahead of the case filing (Gambrell & Associates, n.d.). Chapter 9 deals with municipalities and a municipal is required to demonstrate its eligibility to be a debtor in pursuant of section 109 (c) and such eligibility to file for chapter 9 is often contested by creditor (s). Such is different with chapter 11 whereby eligibility is never challenged as a party is supposed to be eligible for filing save for insurance companies, stockbrokers, insured banks, and commodity brokers. Another