Consumer Bankrupty

Created by Gary Neustadter on July 26, 2017 1058

     Most individuals who incur debt do so primarily for personal, family, or household purposes, such as through the purchase, remodeling, repair, or refinancing of a residence, the purchase of one or more vehicles, the purchase of furniture, appliances, electronic equipment, or jewelry, the use of one or more credit cards (for groceries, dining, entertainment, clothes, vacations, and a wide variety of other goods and services), or by incurring other debts such as for taxes, rent, utilities, or uninsured dental or medical expenses.  We colloquially refer to such debt as "consumer debt."  Federal law (Title 11 of the United States Code - the Bankruptcy Code) authorizes individuals, in appropriate circumstances, to seek relief from consumer debt either by filing a Chapter 7 petition, permitting discharge of debt, or a Chapter 13 petition, permitting plans to repay debt over an extended period of time.   We colloquially refer to use of Chapter 7 or Chapter 13 for these purposes as "consumer bankruptcy," although that term is not used in the Bankruptcy Code.    

     Individuals whose debt is primarily incurred in operating a business (e.g. a sole proprietor of a business), and most corporations, partnerships, and other legal or commercial entities may also seek relief from debt under the Bankruptcy Code (through Chapters 7, 11, 12, and 13 of the Bankruptcy Code), but consumer bankruptcy petitions constitute by far the largest share of bankruptcy petitions filed each year (typically over 95% of all petitions).     

Written by Gary Neustadter on April 28, 2016 0 1382
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