What Is Bankruptcy?
Bankruptcy is a legal proceeding involving an individual or company that is unable to pay off their outstanding debts. The bankruptcy procedure begins with a request filed by the debtor, which is most common, or on behalf of lenders, which is less common. Each of the debtor's assets are measured and evaluated, and the assets might be used to repay a part of the outstanding debt.
Bankruptcy grants an individual or company an opportunity to start fresh by forgiving debts that simply can not be paid while giving creditors an opportunity to acquire some measure of repayment based on the person's or company's assets available for liquidation. Theoretically, the chance to file for bankruptcy benefits the general economy by giving people and businesses a second chance to earn access to credit and by providing creditors with a portion of debt repayment. Upon the successful completion of bankruptcy proceedings, the debtor is released of the debt responsibilities that were incurred before 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 usually handled by a trustee, an officer appointed by the United States Trustee Program of the Department of Justice, to represent the debtor's estate in the case. There is generally 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 specific payment plans. Bankruptcy filing costs vary, depending on the kind of bankruptcy, the complexity of the case, and various other factors.
For More Information About Bankruptcy in Newport Beach, California, Contact Thomas K. McKnight LLP At (800) 466 - 7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!