Let us look at the case of Beren first. Chapter 7 is considered to be a powerful tool while dealing with heavy debts. But it is not for everyone. The following are some of the situations in which a person can or cannot file for Chapter 7 bankruptcy. If a person is having enough income to fund a Chapter 13 repayment plan then he/she is not eligible. The people whose debts come mainly from business are eligible for Chapter 7.
If disabled veteran’s debts were incurred on active duty then they are eligible for Chapter 7.
If a person’s income is less than or equal to the median income of his state then he is eligible for Chapter 7. If it is above then he has to pass the means test. Calculate the current monthly income and see if the total monthly disposable income is less than the $100 then the person passes the means test and he is eligible for Chapter 7. If the remaining disposable monthly income is more than $166.66 then the person won’t the means test and he is not eligible for Chapter 7.
A person cannot file for Chapter 7 if a previous Chapter 7 or Chapter 13 was dismissed within the last 180 days. The reason for this is the person might have violated the court, the court ruled his filing is fraud or constituted an abuse of the bankruptcy system.
From the above reasons there are high chances Beren might be granted his petition for involuntary bankruptcy. The other reasons that ruling go in his favor are the partnership debts, which is $380,000 and had $550 in the partnership bank account.
Chapter 7 or chapter 11 is filed when a troubled business decides that it is unable to service its debt or pay its creditors. With a federal bankruptcy court it can file bankruptcy protection under either Chapter 7 or chapter 11. Chapter 11 is an attempt to stay in business under the supervision of a bankruptcy court for reorganization. A complete or partial relief is granted by court from most of the company’s debts and its contracts and company can make a fresh start. If the debts exceed company’s assets all the company’s owners will end up with nothing after the completion of bankruptcy.
The court is responsible for determining whether the plan of reorganization complies with the purposes of the bankruptcy law and provides for fair and equitable treatment of all parties in interest. Section 507 determines the priority claims of the bankruptcy code. Creditors such as banks and bondholders have a higher priority claim on the proceeds of the sale of corporate assets than unsecured creditors, such as vendors who have not been paid for products they previously delivered to the company.
There are two possibilities for question 2. The court will grant a motion to convert to Chapter 7 or appoint a trustee if either of these actions is in the best interest of all creditors or if no plan of reorganization is approved by the court then the court may either convert the case to a liquidation under Chapter 7.
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?. (2005).Chapter 11, Title 11, United States Code. Wikipedia. Retrieved December 17, 2005. http://en.wikipedia.org/wiki/Chapter_11
?. (2005).303. Involuntary cases. Cornell law school. Retrieved December 17, 2005.
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