What are the different types of bankruptcy?

The different types of bankruptcy in California are divided into two main categories: liquidation and reorganization. Liquidation bankruptcy is also known as Chapter 7. This type of bankruptcy involves the liquidation of assets to pay off creditors. This means that the debtor’s assets are sold off to pay back creditors, after which the remaining debt is discharged. Reorganization bankruptcy, also known as Chapter 13, involves the restructuring of debt. This type of bankruptcy allows the debtor to keep property such as a car or house while they pay off their debts over time. Under Chapter 13, a debt reorganization plan is created that outlines how the debts will be paid off. Another type of bankruptcy is Chapter 11. This type is usually used by large businesses that are highly in debt and need to reorganize their financial affairs. It is similar to a Chapter 13 reorganization, but it also involves a restructuring of contracts with both creditors and employees. Finally, there is Chapter 12 bankruptcy, which is exclusive to family farmers and fishermen. This type of bankruptcy allows debtors to work with creditors to restructure their debt repayments and schedules. Overall, the different types of bankruptcy in California can help debtors to better manage their debt and regain financial stability. Each type is designed to help debtors in different situations, ranging from individuals and small businesses to large corporations and family farmers.

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What are the different types of bankruptcy?

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