1. How Bankruptcy Works
Your Guide to Bankruptcy

2. What is Bankruptcy?
 A consumer protection law.
 It is a Federal process, which allows consumers to have
debts forgiven or discharged.
 Prevents creditors from collecting dept outside of the
bankruptcy filing.

3. What is Bankruptcy?
 The process involves complex areas of the law that
encompass elements of:
 Contract law
 Corporate law
 Tax law
 Real estate law

4. Causes of Bankruptcy
 Scandals
 Lawsuits
 Government Fines
 Creditor Collections
 Sudden Loss of Revenue

5. Bankruptcy Terms
Debt Adjustment: Settled repayment arrangements
that differ from the original arrangements.
Dischargeable Debts: Debts resolved during
bankruptcy.
Nondischargeabe Debts: Debts unresolved when filing
for bankruptcy.

6. Bankruptcy Terms
Lien: A charge or impediment upon property for
the satisfaction of a debt.
Secured Debt: A debt on which a creditor has a
lien.
Unsecured Debt: A debt that is not tied to any
item of property.

7. Types of Bankruptcy
Chapter 7
 Best known as Liquidation Bankruptcy
 For individuals and companies
 Most common type

8. Types of Bankruptcy
Chapter 7
 Process involves selling off non-exempt assets
from the debtor to pay off debt
 Income generated afterwards is not apart of
bankruptcy allowing the debtor to keep money

9. Types of Bankruptcy
Chapter 11
 Most complex amongst businesses & a few
individuals
 The debtor continues to function and maintain
ownership of all assets while working out a plan
to pay off creditors

10. Types of Bankruptcy
Chapter 11
 The Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005.
 A 120-day time span in which the debtor has to come
up with a repayment plan
 If they fail, the creditor will develop a plan themselves

11. Types of Bankruptcy
Chapter 12
 For farm owners
 Allows farmers to keep their assets while forming
a payment plan to pay off their creditors

12. Types of Bankruptcy
Chapter 13
 Similar to Chapter 11, only it is for individuals
 They are given a 3 - 5 year repayment plan while
keeping their assets