To the extent someone who doesn't provide bankruptcy law services knows much about the code, their knowledge usually covers things involving Chapters 7, 11, or 13. For most folks, they'll never need to know more bankruptcy law than this. However, there are some scenarios where you might need to learn about some lesser-known portions of the code. You may run into one of these four.
"Chapter 20"
In the strictest sense, a "Chapter 20" filing isn't a novel form of bankruptcy. Instead, it's a less common use of Chapter 7 and 13 rules in combination. The quotes around "Chapter 20" represent an in-joke among lawyers about the fact that 7 plus 13 equals 20.
Your goal of pursuing a "Chapter 20" filing is to get through one type of bankruptcy, Chapter 7, and then file for another, Chapter 13. In Chapter 7, you liquidate debts. The idea is to liquidate enough of your debts so you can then afford to make payments with a restructuring plan under Chapter 13. People may try this approach to deal with unsecured debts like mortgages and car loans.
Does that sound complex? It is, and you should only consider it with the support of bankruptcy attorney services.
Subchapter V
In 2019, Congress passed a law to provide a version of Chapter 11 bankruptcy for smaller businesses. These are enterprises with less than around $2.7 million in secured and unsecured debts. At least half of the debts must have come from business activities. Notably, a sole proprietorship or small LLC may find this sort of arrangement appealing.
Subchapter V eliminates some of the disclosure requirements of a bigger Chapter 11 filing. In place of the disclosure, the debtor must provide a business history, analysis of liquidation options, and financial projections proving they can make payments if the court restructures their debts.
Chapter 15
By way of international treaties, American bankruptcy law integrates elements of a cross-national model code. Chapter 15 is the mechanism for this integration. It allows someone to conduct bankruptcy proceedings in both the U.S. and a foreign country. Someone submits a petition to a U.S. court for recognition of a foreign proceeding already in progress. The American judge, if they accept the petition, will open a secondary U.S. proceeding covering the debtor's American assets.
Chapter 12
Family farming and fishing operations have a separate section of bankruptcy law. Chapter 12 permits a Chapter 11-style restructuring that addresses issues like homeownership on farms and the variability of incomes in the less predictable economies of farming and fishing.
There are many options for declaring bankruptcy, so to learn more about the possibilities of bankruptcy law, contact a firm near you.
