What Is Bankruptcy?
Bankruptcy is a legal proceeding involving a person or business that is unable to pay back their outstanding debts. The bankruptcy procedure starts with a request filed by the debtor, which is most common, or on behalf of lenders, which is less common. All of the debtor's assets are measured and evaluated, and the assets can be used to pay off a portion of the outstanding debt.
Bankruptcy grants an individual or business an opportunity to start fresh by forgiving debts that simply can not be paid while providing lenders an opportunity to acquire some measure of repayment based on the person's or business's assets available for liquidation. In theory, the ability to file for bankruptcy benefits the overall economy by giving people and businesses a second chance to receive access to credit and by providing creditors with a portion of debt repayment. Upon the successful conclusion of bankruptcy proceedings, the debtor is released of the debt obligations that were incurred prior to declaring bankruptcy.
All bankruptcy proceedings in the U.S. are managed via federal courts. Any decisions in federal bankruptcy cases are made by a bankruptcy judge, including whether a debtor is qualified to file and whether they should be discharged of their debts. Administration over bankruptcy cases is often 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 creditor.
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 repayment with lowered debt covenants or particular repayment plans. Bankruptcy filing expenses vary, depending on the kind of bankruptcy, the complexity of the case, and various other factors.
For More Information About Bankruptcy in Los Angeles, California, Contact Thomas K. McKnight LLP At (800) 466 - 7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!