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Bankruptcy is a very vast topic but if you are looking for a concise explanation of bankruptcy concepts, you are at the right place. Bankruptcy is an event unfortunate for many that help in rebooting an individual’s financial situation. It can be termed as a disaster, but it helps in overcoming traumatic situations of foreclosure, lender threatening, repossession of assets, unsecured debts, etc. Know more about bankruptcy and its related terms in the encyclopedia of bankruptcy – https://www.recoverylawgroup.com/bankruptcy/.
Definition
Bankruptcy, by definition, is a legal framework designed to relieve people in financial distress and ease the burden on them. There are eligibility criteria for bankruptcy and not everyone can just randomly apply for bankruptcy on any given day. Often people think declaring bankruptcy will let you keep assets and discharge all debts, but it isn’t the case. If you pay the debts only then you get to keep assets it is not a legal framework to allow for ‘free assets. Also, not all assets are liquidated, and few assets can fall under some exemptions that can be used to protect some essential or basic assets by the filer.
Bankruptcy process and bankruptcy court
The Bankruptcy structure is like any government or judiciary sector. The first step is to compile the requisite documents and apply them to the bankruptcy court as an application for bankruptcy. Even before applying for bankruptcy, a bankruptcy filer must complete a credit counseling course to proceed further with the bankruptcy procedure. The bankruptcy court can allow for the case to proceed or dismiss the same based on the merit of the case by analyzing the documents submitted by the filer.
An attorney is not mandatory to represent a filer in the bankruptcy court however, a good attorney does help in minimizing court appearances, standardizing documents, proof-reading for common errors, etc. 888-297-6203 is your number to connect with some of the best Los Angeles & Dallas, TX attorneys on your fingertips. Once a meeting between the debtor and lenders completes under the supervision of the bankruptcy trustee, the proposed repayment plan as per chapter 13 or 11 or a liquidation and discharge plan as per chapter 7 are pursued. Before this, the debtor must complete a financial management course to be eligible for discharge.
Different chapters in bankruptcy
There are many chapters popular and less known ones in bankruptcy structure that provide reasonable options to the bankruptcy filer. These with their brief characteristics can be listed as follows-
Chapter 7 – Exchanges your assets for a debt discharge. It is also known as the liquidation chapter as it leads to the liquidation of non-exempt assets of the debtor.
Chapter 13 – This chapter is the second most popular chapter in bankruptcy and is a chapter that emphasizes paying off maximum debts over a period of 3-5 years. This chapter helps in safeguarding potentially all assets and allowing for some unsecured debt discharge as well. Filers with regular and steady incomes prefer chapter 13 for their rescue.
Chapter 11 – This chapter has similar characteristics to chapter 13, but it is open to individuals as well as businesses. There is no cap or a ceiling to apply for this chapter, hence it becomes a great option for businesses and individuals with large debts.
Chapter 9 – This chapter is exclusively available for municipalities, airports, school districts, political subdivisions, etc.
Chapter 12 – This chapter is exclusively for farmers and fishermen.
Chapter 15 – This chapter is for foreign institutions or companies or individuals having assets or liabilities across different countries.