subject: What Is Bankruptcy And Will A Bankruptcy Lawyer Los Angeles Help? [print this page] Most people even vaguely familiar with the world of finance and law have heard of the term bankruptcy and acknowledge the words implications. Bankruptcy, however, is a far more complicated and multi-faceted process and concept than your common layperson may imagine.
Bankruptcy can be simply defined as a legal process in which a business financial troubles can be put to order by the protection of a bankruptcy court. It can be a viable option for business with severe financial crises.
A bankruptcy attorney Riverside knows that all bankruptcy laws and processes are outlined in the Title 11 Bankruptcy Code in 1978 under Constitutional authority in Article I, Section 8. This Bankruptcy Code governs all bankruptcy cases, and any information on bankruptcy will be found here.
As any bankruptcy lawyer Los Angeles will tell you, there are two major types of bankruptcy, although there are actually six types of bankruptcy cases that can be provided by the United States Bankruptcy Code.
Chapter 7 bankruptcy involves the total liquidation of business assets in order to pay off a debt. A portion of this liquidation also goes to the filers in order to recover from bankruptcy and even generate more income by starting over with a new business.
Chapter 7 is often the bankruptcy of choice by those with few assets, little income and a lot of debt that cant be repaid by income alone. What assets will be sold or liquidated and what you will be able to keep largely depends on individual state laws. For example, some states allow you to keep your home equity, while others may require you to relinquish a specific amount of it in a bankruptcy case. In Virginia, for instance, homeowners filing for bankruptcy are allowed to keep their wedding rings.
Over 90 percent of Chapter 7 cases are non-asset cases. Once you go with Chapter 7 bankruptcy, you may only file once every six years. Depending on which state you file for bankruptcy in, you may not be able to keep your house or car if youre struggling to make payments on them.
At the start of the Chapter 7 filing process, the individual lists all assets. A bankruptcy trustee goes over this list and determines which unprotected assets can be sold or liquidated. Creditors can also debate the list of assets, in the case that a filer lies or leaves out assets in the list.
Keep in mind that not all debts go away with a Chapter 7 bankruptcy. Debts that still need to be paid include alimony, student loans, child support and criminal fees.
Chapter 13 bankruptcy, known also as debt adjustment, gives the business or individual an extended deadline of three to five years before paying off debts. The number of years will vary with each case. Chapter 13, unlike Chapter 7, allows the individuals to keep their home while adjusting how much they pay and when. The restructured repayment plan must be approved by a bankruptcy court.
Knowing about the different types of bankruptcy will make you well informed about your options, should you end up in a fraught financial crisis.
