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  • What is the difference between chapters?

    Chapter 7

    Individuals, corporations and partnerships are eligible. A trustee is appointed to liquidate the estate. State law determines what portion of his property a debtor may keep by claiming he is exempt. The trustee will sell the rest of the debtor's property and distribute the proceeds to creditors. If all the debtor's property is exempt, the case will be a "no-asset case, " with no distribution to creditors.

    Chapter 11

    Although individuals may file a petition under Chapter 11, it is primarily designed for the rehabilitation of distressed businesses. The court's largest and most complex cases are usually Chapter 11 cases. When a Chapter 11 petition is filed, the debtor becomes a "debtor-in-possession" with rights and duties of a trustee. No trustee will be appointed in the case unless some interested party motions the court to do so and shows sufficient "cause" (e.g. fraud or mismanagement on the part of the debtor). A committee of unsecured creditors is usually appointed in Chapter 11 cases to act as a counterbalance to management. The Chapter 11 debtor's ultimate goal is to file a plan of reorganization that is acceptable to creditors and the court.

    Chapter 12

    This chapter was enacted into law by the 99th Congress in 1986 to provide relief for family farmers with a regular income. Chapter 12 is patterned very closely after a Chapter 13, but has attributes of Chapter 11 as well. Individual, corporate or partnership farming operations are eligible to file where aggregate debts (secured and unsecured ) do not exceed $1,500,000.00. A plan must be filed within 90 days of the entry of the order for relief, unless the court extends that time. The trustee, though appointed upon filing, does not remove the family farmer debtor-in-possession. After confirmation, payments are made to the trustee to consummate the plan.

    Chapter 13

    This chapter provides a way for individuals with a regular source of income to pay off their debts over a period of time and under the courts and trustee's supervision. Corporations and partnerships may not file under Chapter 13. Individuals may file only if their unsecured debts do not exceed $250,000.00 and their secured debts do not exceed $750,000.00. A plan is filed with the petition or immediately after. Payments are made to the Chapter 13 "Standing trustee," who makes distribution to creditors according to the provisions of a confirmed plan. The debts may be paid back in whole or in part, depending on what the debtor is able to do.

  • What is the function of the U.S. Trustee?

    The Office of the United States Trustee is an Executive Branch agency within the Department of Justice. Its function is to oversee the administration of bankruptcy cases. The U.S. Trustee establishes and supervises a panel of private trustees in chapter 7 cases, appoints standing trustees in chapter 13 cases, and appoints case trustees in chapter 11 and chapter 12 cases. The U.S. Trustee monitors the administration of chapter 11 cases by, among other things, reviewing disclosure statements and plans of reorganization, and monitoring post-confirmation plan performance. The U.S. Trustee also monitors bankruptcy cases for possible crimes which may be reported to the United States Attorney.

  • Where can I obtain petition forms?

    View the Frequently Used Forms section for an online version document, or visit the Bankruptcy Court Clerk's office for a paper copy.

  • Who do I notify about a possible fraudulent filing?

    The Office of the United States Trustee reviews complaints about possible fraudulent filings and, if appropriate, notifies the U.S. Attorney for further investigation. For more information contact: The US Trustee’s Office at (787) 729-7444.

  • What is a bankruptcy discharge?

    This court order grants a discharge to the person(s) named as the debtor. It is not a dismissal of the case and it does not determine how much money, if any, the trustee will pay to creditors.

    Collection of Discharged Debts Prohibited
    The discharge is an injunction which prohibits any attempt to collect from the debtor(s) a debt that has been discharged. For example, a creditor is not permitted to contact a debtor by mail, phone, or otherwise, to file or continue a lawsuit, to attach wages or other property, or to take any other action to collect a discharged debt from the debtor. There are also special rules that protect certain community property owned by the debtor's spouse, even if that spouse did not file a bankruptcy case. A creditor who violates this order can be required to pay damages and attorney's fees to the debtor. However, a creditor may have the right to enforce a valid lien, such as a mortgage or security interest, against the debtor's property after the bankruptcy, if that lien was not avoided or eliminated in the bankruptcy case. Also, a debtor may voluntarily pay any debt that has been discharged.

    Debts That Are Discharged
    The chapter 7 discharge order eliminates a debtor's legal obligation to pay a debt that is discharged. Most, but not all, types of debts are discharged if the debt existed on the date the bankruptcy case was filed. (If this case was begun under a different chapter of the Bankruptcy Code and converted to chapter 7, the discharge applies to debts owed when the bankruptcy case was converted.)

    Debts That Are Not Discharged
    Some of the common types of debts which are not discharged in a chapter 7 bankruptcy case are: a. Debts for most taxes; b. Debts that are in the nature of alimony, maintenance, or support; c. Debts for most student loans; d. Debts for most fines, penalties, forfeitures, or criminal restitution obligations; e. Debts for personal injuries or death caused by the debtor's operation of a motor vehicle while intoxicated; f. Some debts which were not properly listed by the debtor; g. Debts that the bankruptcy court specifically has decided or will decide in this bankruptcy case are not discharged; h. Debts for which the debtor has given up the discharge protections by signing a reaffirmation agreement in compliance with the Bankruptcy Code requirements for reaffirmation of debts.

    This information is only a general summary of the bankruptcy discharge. There are exceptions to these general rules. Because the law is complicated, you may want to consult an attorney to determine the exact effect of the discharge in this case.

  • What does it mean when a case is dismissed?

    A dismissal order ends the case. The dismissal order removes the automatic stay which prevented a creditor from collecting on a debt or taking other actions against the debtor and the debtor's property. Debts that are discharged prior to dismissal are not affected by the dismissal order, unless the discharge order was revoked. A case generally is dismissed when the debtor fails to do something such as appear at the meeting of creditors, file the schedules and statement of financial affairs, pay the filing fee, produce books and records for the trustee, or when the dismissal is in the best interest of creditors.

    While the information presented above is accurate as of the date of publication, it should not be cited or relied upon as legal authority. It is highly recommended that legal advice be obtained from a bankruptcy attorney or legal association. For filing requirements, please refer to the United States Bankruptcy Code (title 11, United States Code), the Federal Rules of Bankruptcy Procedure (Bankruptcy Rules), and the Local Rules for the United States Bankruptcy Court for the District of Puerto Rico.