Going bankrupt is a difficult phase to navigate for a person or an organization. This is why filing for bankruptcy is the beginning of a much-needed financial rehabilitation process for such entities. However, doing so is a somewhat complicated procedure. One needs to know the various chapters in the country’s bankruptcy laws to understand which one to opt for. Here are some details regarding the chapters and the overall process of filing for bankruptcy:

Bankruptcy chapters
Here are the chapters linked to bankruptcy in the country’s overall legal framework:

• Chapter 7
  This chapter is a liquidation proceeding that businesses and individuals can use to begin their bankruptcy filing process. A debtor’s assets that are not exempt from creditors are seized and liquidated (converted into liquid money). The proceeds from this process are distributed among the creditors.

  Suppose the entity filing for bankruptcy is a consumer debtor. In that case, they receive a complete discharge from debt under this chapter, except for some debts prohibited from discharge by the Bankruptcy Code (an accompanying set of laws in the bankruptcy framework).

• Chapter 11
  This chapter is primarily for businesses that go under during rough financial times. This chapter offers businesses a chance to reopen as it facilitates restructuring their debts and assets. This chapter simplifies the process of businesses paying back what they owe their creditors. On the downside, individuals and married couples usually do not use this chapter, as it does not offer many solutions for personal bankruptcy. This is why filing for Chapter 11 bankruptcy is a sensible option for high-income earners or business owners who cannot file for Chapter 13 bankruptcy due to accruing too much debt.

• Chapter 12
  This chapter applies to “family farmers” and “family fishermen.” The debts owed should not exceed about $11 million for farmers and $2.2 million for fishermen. One must receive a steady annual income in these respective occupations to qualify for this chapter.

• Chapter 13
  This chapter includes debtors paying off some of their owed money and being forgiven for the rest. This bankruptcy chapter is for people with a high income who do not wish to give up their property. A catch in this chapter is that the debt amount should not exceed a certain value (determined dynamically by the judiciary party governing the bankruptcy proceedings). This amount varies and is periodically assessed and reevaluated. The slightly complex nature of this chapter means that debtors need to hire a bankruptcy attorney before filing for it.

• Chapter 15
  This is one of the few chapters that deals with bankruptcy proceedings for entities with assets in the country and abroad. Generally, US courts only have power and jurisdiction over cases within the country’s territorial boundaries. In that sense, this chapter greatly simplifies the scenarios where debtors have international debts to worry about.

How to file for bankruptcy
The basic process of filing for bankruptcy is straightforward:

• Collate all the documents to assess one’s finances and debts.
• Receive the required credit counseling course from an approved provider.
• Fill in the necessary bankruptcy forms.
• Pay the filing fee for the process.
• Print and carefully double-check the bankruptcy forms before submitting them.
• Visit one’s local bankruptcy court to file the filled-out forms.
• Mail the financial and other documents to one’s trustee.
• Take a financial management course.
• Attend one’s 341 meeting.
• Deal with one’s car loans.