What Is Bankruptcy?
Bankruptcy is a legal proceeding involving a person or company that is unable to repay their outstanding debts. The bankruptcy process starts with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. Each of the debtor's assets are measured and evaluated, and the assets might be used to pay back 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 giving creditors a chance to obtain some measure of repayment based on the person's or company's assets available for liquidation. In theory, the chance to file for bankruptcy benefits the general economy by allowing individuals and companies a second chance to earn access to credit and by providing creditors with a portion of debt repayment. Upon the successful conclusion of bankruptcy procedures, the debtor is alleviated of the debt obligations that were incurred prior to filing for bankruptcy.
All bankruptcy proceedings in the United States 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 absolved of their debts. Administration over bankruptcy cases is commonly 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 proceeding. There is generally very little direct contact between the debtor and the judge unless there is some opposition made in the case by a creditor.
Kinds of Bankruptcy Filings
Bankruptcy filings in the U.S. fall under one of several chapters of the Bankruptcy Code, including Chapter 7, which involves the liquidation of assets; Chapter 11, which deals with business or individual reorganizations; and Chapter 13, which arranges for debt repayment with lowered debt covenants or specific repayment plans. Bankruptcy filing costs differ, depending on the kind of bankruptcy, the complexity of the case, and other factors.
For More Information About Bankruptcy in Orange, California, Contact Thomas K. McKnight LLP At (800) 466 - 7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!