Minnesota residents may be familiar with the fact that 50 Cent is filing for bankruptcy. However, most people may not be aware of the fact that he is filing under Chapter 11. This is a step that most corporations take when trying to reorganize their debt, and it appears that he will propose a plan to restructure his obligations while continuing his business operations.
Under Chapter 7 bankruptcy rules, some of a debtor's assets are considered exempt property and cannot be liquidated to pay off existing obligations. In many cases, creditors get little of what they are owed or get nothing at all. While such a case is ongoing, creditors generally have to stop collection efforts unless a stay is lifted by the judge overseeing the case.
When an individual files for Chapter 7 bankruptcy, the liquidation of his or her assets will be overseen by a trustee. This person is responsible for inventorying assets for liquidation and may act as a liaison between the court, the debtor and creditors. For wealthy individuals, filing for Chapter 13 bankruptcy, the other principal form of consumer bankruptcy and one which allows for debts to be paid off over time pursuant to a court-approved plan, may not be an option. Those who have more than $1,010,650 of secured debt or more than $336,900 in unsecured debt are not eligible to file under that chapter.
Those who are struggling with debt may wish to file for Chapter 7 bankruptcy. An attorney may be able to describe in detail the eligibility and other requirements and assist with the preparation of the petition.