subject: Bankruptcy - Reorganization And Liquidation [print this page] When financial problems overwhelm you, the only relief you might have is bankruptcy. Of course, for quite some time there seemed to be a stigma associated with folks who filed for bankruptcy. Today, however, bankruptcy is a lot more common, seen as an opportunity instead of a failure. If you wish to seek bankruptcy relief, then you need to know that you'll find two main kinds of bankruptcy: liquidation and reorganization.
A person or a business can file for a liquidation bankruptcy under Chapter 7 of the bankruptcy laws. During the progression of liquidation, a court appointed trustee is placed on the case. Relying on the filers bankruptcy status, an order of priority is set up for the creditors. Then the trustee gathers the filers property, sells it, and redirects the earnings to all creditors based on their priority level. All the other debts are cleared.
Reorganization is a bit more of a payment plan. This system is put into place if a debtor is still receiving regular monthly income, income that can be converted into creditor payments. Reorganization can be an option for both businesses and individuals, and the specific chapter used is based upon the sum of debt incurred.
But that's not all. There are plenty of other subtle bankruptcy rules and nuanses that you have to know so that you can file. Since this issue is so complicated, it's recommend that a debtor hire a bankruptcy lawyer before filing. Good bankruptcy attorneys can guide you through the process and help you get out of debt.
