Final answer:
Individuals typically file for bankruptcy under Chapter 7 or Chapter 13, while businesses generally file under Chapter 7 or Chapter 11. Individual bankruptcy involves liquidation or reorganization, depending on the chapter, while business bankruptcy allows for reorganization or complete closure. Eligibility criteria and treatment of debts also differ for individuals and businesses.
Step-by-step explanation:
The bankruptcy codes available for individuals and businesses have some distinguishing characteristics. One major difference is that individuals typically file for bankruptcy under Chapter 7 or Chapter 13 of the Bankruptcy Code, while businesses generally file under Chapter 7 or Chapter 11. Chapter 7 bankruptcy for individuals involves the liquidation of assets to pay off debts, while Chapter 13 bankruptcy allows individuals to reorganize their debts and create a repayment plan. On the other hand, Chapter 7 bankruptcy for businesses involves the complete closure of the business and the liquidation of assets, while Chapter 11 bankruptcy allows businesses to reorganize and continue operating.
Another difference between individual and business bankruptcy codes is the eligibility criteria. Individuals have to meet certain income requirements to qualify for Chapter 7 bankruptcy, while Chapter 13 bankruptcy is available to individuals who have a regular source of income. Businesses, on the other hand, can file for Chapter 7 or Chapter 11 bankruptcy regardless of income.
One more distinction is the treatment of debts. In individual bankruptcy, certain types of debts, such as student loans and child support, may not be discharged or eliminated. In business bankruptcy, debts are typically treated differently based on their priority. Secured debts, which are backed by collateral, have priority and are often paid in full. Unsecured debts, such as credit card debt, may receive partial payment or be discharged altogether.