What Is Bankruptcy?
Bankruptcy is a legal proceeding involving a person or company that is unable to repay their outstanding debts. The bankruptcy procedure starts with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor's assets are measured and evaluated, and the assets may be used to pay off a portion of the outstanding debt.
Bankruptcy gives an individual or business an opportunity to start fresh by forgiving debts that simply can not be paid while giving lenders a chance to obtain some measure of repayment based on the individual's or company's assets available for liquidation. In theory, the ability to file for bankruptcy benefits the overall economy by giving people and companies a second chance to earn access to credit and by providing lenders with a portion of debt repayment. Upon the successful completion of bankruptcy procedures, the debtor is alleviated of the debt responsibilities that were incurred before filing for bankruptcy.
All bankruptcy proceedings in the U.S. are handled via federal courts. Any decisions in federal bankruptcy cases are made by a bankruptcy judge, including whether a debtor is eligible to file and whether they should be cleared of their debts. Administration over bankruptcy cases is typically managed by a trustee, an officer selected by the United States Trustee Program of the Department of Justice, to represent the debtor's estate in the case. There is usually very little direct contact between the debtor and the judge unless there is some objection made in the case by a lender.
Kinds of Bankruptcy Filings
Bankruptcy filings in the United States fall under one of several chapters of the Bankruptcy Code, including Chapter 7, which involves the liquidation of assets; Chapter 11, which deals with company or individual reorganizations; and Chapter 13, which arranges for debt payment with lowered debt covenants or specific repayment plans. Bankruptcy filing expenses vary, depending on the type of bankruptcy, the complexity of the case, and other factors.
For More Information About Bankruptcy in Fountain Valley, California, Contact Thomas K. McKnight LLP At (800) 466-7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!