Modes of Payment in Los Angeles Bankruptcy Law

Modes of Payment in Los Angeles Bankruptcy Law

Los Angeles is one of the most progressive cities in the United States. It is the center of trade, commerce, tourism, and entertainment in California. Many information technology and manufacturing companies have their headquarters in the city. Big corporations fuel the city's $831 billion economy. Economists say Los Angeles is one of the richest cities in the United States, second only to New York. Businesses play an important role in the city's progressive economy.

During the 2000 economic downturn, Los Angeles' economy was direly affected. Several commercial establishments closed down. Stocks and financial assets plummeted. Companies filed bankruptcy in court.

Bankruptcy refers to inability to pay liabilities. In law, liabilities are debts and credit accounts. These include cash advances, credit cards, and personal debts.

Some businessmen begin business with a collateral capital. They acquire collateral capital from bank loans. A collateral capital is a form of liability. Businessmen are sometimes unable to pay their collateral capital in due time. They have constant sales and revenue. Their sales value is equal, or worse, less than the business expenditures. As interest rates increase, their credit account increases as well. Therefore, they cannot pay the total value of debt from banks.

Bankruptcy laws have helped businessmen pay collateral debts. There are three modes of payment in bankruptcy. These are asset payment, repayment, and regular payment. In asset repayment, a debtor pays the creditor through non-exempt assets. Non-exempt assets are luxuries, added ownerships, and income sources. Examples of these are multiple cars, vacation houses, and business enterprises. These are given to creditors through a Los Angeles bankruptcy attorney.

Moreover, a debtor can give repayment to creditors. In repayment, debtors are allowed to continue business operations. Nevertheless, a percentage of their total profit goes to the creditor. The creditor gains a partial ownership of one's business. Ownership depends on the business profit. During proceedings, a Los Angeles bankruptcy attorney specifies a creditor's percentage ownership. Partial ownership lasts until payment is completed.

The regular mode of payment is slightly similar with repayment. A debtor gives consecutive payments to creditors. Payment comes from individual monthly income. This mode of payment is applicable to individuals with regular employment. They have a mean income of about 360 million dollars. Duration of payment is usually 3 to 5 years. These modes of payment have helped businessmen recover from debts. All bankruptcy cases are handled by a Los Angeles bankruptcy attorney.

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