Bankruptcy provides an opportunity to gain a fresh start for those who may qualify. Since 2005, the qualification has become taking bankruptcy courses and means-testing. Commonly meaning, a review of income guidelines and other factors to determine qualification. Those that do fall in those categories and pass those tests can get a Chapter 7 bankruptcy. Chapter 7 discharge is often what we call a total discharge of their eligible debt. Many clients feel there is a stigma associated with bankruptcy, but that’s not true. Bankruptcy provides an opportunity to start over when there’s a need to start over, especially here in this climate. During the climate of the pandemic, many have lost their jobs, their homes, their funds, and their resources, so bankruptcy provides them with a Fresh Start.
Chapters of Bankruptcy
Chapter – 11
In Chapter 11 bankruptcy, overburdened companies, typically businesses are helped in reorganizing and being more successful. An entity’s debts to service companies, retailers, and financing organizations grow as it continues to operate. When the market changes, successful companies might become less successful. Also, improperly managed businesses and those who are less likely to be viable as they continue to suffer from unsustainable debt levels, too become less successful. Chapter 11 provides an opportunity for those entities to pause their financial turmoil and adjust to the company for the long term.
Chapter – 13
For some individuals, filing for bankruptcy under Chapter 13 is a voluntary choice. This type of bankruptcy is common today since it helps to qualify debtors to stretch their debt payment periods and reduce their current debt interest rates. A Chapter 13 bankruptcy situation, on the other hand, has the advantage of allowing the debtor to retain his/her property, such as a house or car. This is accomplished by Chapter 13, which requires the applicant to follow a scheme that restructures current debt obligations over three to five years. If a Chapter 13 debtor follows his/her scheme to the letter, he/she will obtain a release from the affected debts at the conclusion of the term. When a Chapter 13 debtor is unwilling to carry out the terms of the plan, the bankruptcy can be converted to a Chapter 7 case or dismissed.
In Chapter 13 cases, a bankruptcy attorney plays a critical role, as he/she must prepare numerous paperwork with the court, negotiate with creditors, and assist the debtor in developing a repayment plan. The bankruptcy court must approve the Chapter 13 debtor agreement. Therefore, a bankruptcy trustee is essential, and he/she can oversee the debtor’s compliance with the plan and manage compensation for the term.
Chapter – 7
For a debtor who is completely unwilling to pay his debts, Chapter 7 bankruptcy is often a last resort solution. Chapter 7 bankruptcy is a drastic way of determining the assets by dividing them as evenly as practicable to creditors on both individual and business debtors. Chapter 7 bankruptcy case signals the end of the concern, and its premises, cash, and inventory are sold to help creditors recoup their losses. In the case of individuals, Chapter 7 still oversees property liquidation; however, the claimant may obtain personal compensation by discharge.
Handling Bankruptcy without Legal Assistance
Most bankruptcy proceedings can benefit significantly from the assistance of an experienced attorney. It could be easy to navigate a basic bankruptcy on your own if you just have a few assets. However, hiring a bankruptcy attorney is a wise investment whether you have small or significant assets, are applying for chapter 13, chapter 7, and or chapter 11, or if you have any questions.
Role of a Bankruptcy Attorney
If you own a business or have few too many assets, it’s always a wise decision to hire a bankruptcy attorney. An attorney who is familiar with all of the bankruptcy laws will assist you with completing the transaction with as minimal financial loss as possible. And if you want to settle the case on your own, it is always a good idea to get the papers reviewed by an attorney before filing.
Many that file bankruptcy of their own run the risk of misreporting and or inaccurately reporting their debts and assets. If a lawsuit is brought incorrectly, the bankruptcy judge may deny it. On the other hand, a skilled bankruptcy attorney would be willing to assist you with your financial matters, advising you on the proper ways to retain the valuable property and if applicable, help you structure a fair repayment plan.
Although bankruptcy can be stressful, getting a legal representative to help you through the procedure would make things run even more smoothly than navigating the bankruptcy waters yourself.