Under the Bankruptcy Code, a voluntary or involuntary case is commenced by filing a petition with the bankruptcy court. A Chapter 7 or 11 bankruptcy case may be initiated by a voluntary filing by the debtor or by an involuntary filing by the debtor's creditors. Cases under all other chapters may be initiated only by a voluntary petition.
Only individuals may file for Chapter 13 bankruptcy. Corporations and partnerships may not file for Chapter 13 bankruptcy. Any individual, even if self-employed or operating an unincorporated business, is eligible for Chapter 13 relief as long as that individual has regular income greater than reasonable living expenses, has unsecured debts not exceeding a certain sum, and has secured debts not exceeding a certain sum.
Debtors must report assets, liabilities, contested claims, and other business affairs. The purpose of these disclosures is to allow creditors an opportunity to evaluate proposed plans. Disclosure statements must contain "adequate information." The specific information required is determined on a case by case basis by the court and may include any information which the court deems reasonable and necessary for parties in interest to reach informed decisions before voting on plan confirmation.
If a trustee or a holder of an unsecured claim objects to the plan, the court cannot approve the plan unless the plan provides that all of the debtor's projected disposable income to be received during the plan will be applied to make payments under the plan. It is significant to understand that an objection by the mentioned parties must be made for the court to consider this requirement.
Secured claims include liens, security interests, security agreements, and secured claims. An allowed claim secured by a lien on property in which the estate has an interest, or that is subject to setoff, is a secured claim to the extent of the value of the creditor's interest in the estate's interest in the property or the amount subject to setoff. A secured claim carries the right to adequate protection of collateral. Unavoided liens survive bankruptcy but circumstances may demand action by a secured creditor to protect the lien.