The Bankruptcy Code Makes Several Options Available

While there are many options available to consumers before considering bankruptcy, there are also many options for bankruptcy as well.  AICCCA Counselors can provide a thorough review and recommend the best options available for a consumer facing serious debt issues.  It is always advisable to consult an AICCCA Counselor before making a final decision about which option to take.

Most consumers don’t really have a good knowledge about how the bankruptcy system works.  Here are some basics:

Chapter 7 of the Bankruptcy Code is available to both individual and business debtors. Its purpose is to achieve a fair distribution to creditors of the debtor’s available non-exempt property.  Unsecured debts not reaffirmed are discharged, providing a fresh financial start.

Chapter 11 of the Bankruptcy Code is available for both business and consumer debtors. Its purpose is to rehabilitate a business as a going concern or reorganize an individual’s finances through a court-approved reorganization plan.

Chapter 12 of the Bankruptcy Code is designed to give special debt relief to a family farmer with regular income from farming.

Chapter 13 of the Bankruptcy Code is available for an individual with regular income whose debts do not exceed specific amounts; it is typically used to budget some of the debtor’s future earnings under a plan through which unsecured creditors are paid in whole or in part.   

Each of these Chapters of the Bankruptcy Code has its place but each situation is unique.  A Certified Counselor can usually provide the best range of options available to a debtor.

David C. Jones, Ph.D.
AICCCA President