Thomas K. McKnight - Bankruptcy Service Law Firm in Tustin, California
What Is Bankruptcy?
Bankruptcy is a legal proceeding involving a person or company that is unable to pay off their outstanding debts. The bankruptcy procedure begins 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 can be used to repay a part of the outstanding debt.
Bankruptcy gives an individual or company 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 business's assets available for liquidation. Theoretically, the chance to declare 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 conclusion of bankruptcy proceedings, the debtor is relieved of the debt obligations that were incurred prior to declaring bankruptcy.
All bankruptcy cases 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 commonly handled 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 usually very little direct contact between the debtor and the judge unless there is some opposition made in the case by a lender.
Types of Bankruptcy Filings
Bankruptcy filings in the U.S. fall under one of several chapters of the Bankruptcy Code, consisting of 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 reduced debt covenants or particular payment plans. Bankruptcy filing costs differ, depending on the type of bankruptcy, the complexity of the case, and other factors.
For more information about chapter 7 and chapter 13 bankruptcy, or how to file your bankruptcy in Tustin CA, contact Thomas K McKnight LLP at (800) 466 - 7507 or visit our website at TKMLLP.com for a Free Consultation.