The thought of filing for bankruptcy can be daunting, and ideally you will never have to consider it. However, if you happen to find yourself in serious financial distress and overwhelmed with debt, bankruptcy and the law governing it can help reorganize your life or business and protect you from creditors.
Federal bankruptcy law is governed by the United States Bankruptcy Code. There are four types of mechanisms that may be used to discharge debt, delineated in chapters 7, 11, 12, and 13, respectively. Under Chapter 7 bankruptcy, the debtor’s assets are sold and the creditors are repaid. If the sale is insufficient to repay all debts, the remaining debts are discharged, and the creditors have no further claims against the debtor. This type of bankruptcy is generally used by individuals.
Businesses usually opt to utilize bankruptcy and the law under Chapter 11. This chapter allows the debtor to maintain all assets and reorganize the debt or company in order to pay the creditors. Reorganization may include establishing a new repayment plan, terminating employees, renegotiating business contracts, closing retail stores, and offering stock options in lieu of payment. In theory, the company can then continue to operate. However, if the business is incapable of creating a plan that would properly satisfy the creditors, a Chapter 7 bankruptcy might be required by the court.
Individuals are not eligible to file under Chapter 11. However, they can file under Chapter 13, which similarly gives them the opportunity to negotiate a repayment plan instead of selling their assets. The amount of debt that can be filed under this chapter is limited by the Code, and may also depend on the debtor’s state of residency. Chapter 12 allows farm owners to reorganize their debt in the form of repayment plans as well.
It is critical to speak with an attorney to discuss your specific circumstances and needs. Perhaps equally important is to understand that bankruptcy and the law surrounding it exists not only to repay creditors, but to assist debtors in escaping their debts and moving on with their lives. Follow the link below to learn more.
http://www.brentgeorgelaw.com/bankruptcy/
Federal bankruptcy law is governed by the United States Bankruptcy Code. There are four types of mechanisms that may be used to discharge debt, delineated in chapters 7, 11, 12, and 13, respectively. Under Chapter 7 bankruptcy, the debtor’s assets are sold and the creditors are repaid. If the sale is insufficient to repay all debts, the remaining debts are discharged, and the creditors have no further claims against the debtor. This type of bankruptcy is generally used by individuals.
Businesses usually opt to utilize bankruptcy and the law under Chapter 11. This chapter allows the debtor to maintain all assets and reorganize the debt or company in order to pay the creditors. Reorganization may include establishing a new repayment plan, terminating employees, renegotiating business contracts, closing retail stores, and offering stock options in lieu of payment. In theory, the company can then continue to operate. However, if the business is incapable of creating a plan that would properly satisfy the creditors, a Chapter 7 bankruptcy might be required by the court.
Individuals are not eligible to file under Chapter 11. However, they can file under Chapter 13, which similarly gives them the opportunity to negotiate a repayment plan instead of selling their assets. The amount of debt that can be filed under this chapter is limited by the Code, and may also depend on the debtor’s state of residency. Chapter 12 allows farm owners to reorganize their debt in the form of repayment plans as well.
It is critical to speak with an attorney to discuss your specific circumstances and needs. Perhaps equally important is to understand that bankruptcy and the law surrounding it exists not only to repay creditors, but to assist debtors in escaping their debts and moving on with their lives. Follow the link below to learn more.
http://www.brentgeorgelaw.com/bankruptcy/