Bankruptcy: What Is It?
Bankruptcy is how the courts define the legal proceeding in which an individual, married couple, or a business asks the court to relieve them from overwhelming and debt that they owe to creditors.
Each state as well as the Federal Government have statutes on their books for the proceeding. Some States are more favorable to file in than others.
Depending on what type of bankruptcy you file not only can you be relieved of your debts, and receive a fresh financial start and in some cases it provides a path for creditors to be reimbursed through a liquidation of the petitioners assets not protected by the use of legal exemptions
Types of Bankruptcies
There are many different types of bankruptcy filings. Each is referred to as a Chapter, as each one is broken down as Chapters within the State and federal Bankruptcy Code.
The most frequent of these filings though for individuals and married couples are Chapter 7 and Chapter 13.
Chapter 7 is commonly referred to as the “liquidation chapter” as it This is usually referred to as “liquidation bankruptcy”, and is the most basic form of bankruptcy. It requires a debtor to “liquidate” their property (aside from what the courts allow the debtor to exempt) and pay off their creditors with the proceeds.
Chapter 13 is referred to by some as Reorganization and by others as the “wage-earner plan,” allows a debtor that earns regular income to develop a plan to pay back parts, or all, of their debts. The big advantage of filing chapter 13 is it allows homeowners to avoid foreclosure on their houses, in contrast to chapter 7.
Whatever chapter you might be interested in, or what other questions you may have. We are here for you. Contact us now to schedule a free consultation.
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