Bankruptcy chapters are procedure for individual, partnership firms, companies or bankruptcy to file bankruptcy. There three important chapters in UK for bankruptcy:
Bankruptcy chapter 7 – bankruptcy chapters 7 has been introduced for individual especially. It contains the complete liquidation property and assets of debtor. Court sells the expensive assets of debtor to recover the amount of creditors. After selling the property, amount is distributed to creditors as per debts or pro-rata basis by court.
Bankruptcy chapter 11 – This chapter is used by companies or organization to file bankruptcy. This option is not for individual at all. It gives the opportunity to business to reorganise themselves or restructure the debt.
Bankruptcy chapter 13 – Generally, it is applied by small business owners so they can repay the debts to creditors. It provides opportunity to debtor to retain the assets and repay the debts by making some changes in expenditure of debtors.
Bankruptcy was a embarrassing situation few years ago, but now people use it as a financial tool to repay the money to creditors. It is advisable not to file bankruptcy, if you are still able to repay the debts.
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