Section 6, Bankruptcy

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4 Terms

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What are the main difference between chapter 7,11, and 13 bankruptcy?

Chapter 7, Liquidates assets, Chapter 11 reorganizes businesses, and chapter 13 allows individuals to repay debt.

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Chapter 7 Bankruptcy
Property and debts are placed under the bankruptcy court. If real estate is sold, the mortgage holder is paid first, then remaining funds go to creditors through the court-appointed trustee.
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Chapter 11 Bankruptcy

Typically used by businesses to reorganize and repay creditors. Secured debt (bondholders) have first claim priority.
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Chapter 13 Bankruptcy

Used by individuals who agree to repay all or part of their debt over 3–5 years. Must have a steady income to qualify.