Bankruptcy

Bankruptcy comes about when an individual or business is insolvent or is unable to pay their debts. They are given the chance to file a petition to the bankruptcy court to be judged legally insolvent, wherein the court will take charge of certain assets and distribute them amongst creditors. There are two main types of bankruptcy: liquidation and reorganization.

Chapter 7

Chapter 7 – liquidation – This is the most common form of bankruptcy for individuals. It involves the debtor’s legally nonexempt assets to be liquidated to satisfy the claims of creditors. If there is nothing to be liquidated, it is referred to as a “no asset” case. The goal is to provide immediate and complete relief from oppressive debts and creditors.

Chapter 13

Chapter 13 – reorganization – This form of bankruptcy involves the court reorganizing an income-receiving debtor’s assets in order to pay creditors with their income. Assets are protected in this instance, although some may be liquefied if needed. The goal in Chapter 13 is rehabilitation for the debtor, if they follow the court-approved plan to pay off their debts.

If you are facing possible bankruptcy, you need an experienced and helpful lawyer who stays abreast of changing bankruptcy laws and can help you secure your financial future.