Bankruptcy Law Terms You Need To Know
Is there anything worse than bills piling up and not having enough money to pay them? Bankruptcy is an admittance that you aren’t going to be able to pay off your debt now — and with mounting interest and financing charges, probably not ever. It is a legal procedure that either a business owner or an individual can initiate to have their debts forgiven or reorganized by the court to make it possible for the person or company to get their feet back on stable financial ground.
There are many types of bankruptcy proceedings for which a person can petition, but there are three most common types. Chapter 7 is a bankruptcy proceeding that involves an individual petitioning for their financial situation. Chapter 11 is when a business petitions for a reorganization and rehabilitation of their processes, and Chapter 13 involves a wage earner’s plan.
Almost all bankruptcy proceedings are the jurisdiction of the federal government and are encompassed under federal law. Some states do govern whatever issues aren’t covered under the guidelines of the federal laws in place. If someone wants to go through bankruptcy proceedings, it is usually handled in the US Bankruptcy Court. If you are considering filing for bankruptcy, it is imperative that you find a good Harrisburg bankruptcy lawyer, to protect your interests, and it is also important that you know the following terms and how they will affect your finances.
A bankruptcy petition is a document that is filed in the US Bankruptcy Court, and it is the beginning stage of the process for bankruptcy proceedings. It usually is a statement of the debtor’s debts, liabilities, and assets.
Chapter 7 pertains to individual bankruptcy and is filed under the US Bankruptcy Code. It involves an individual liquidating their assets or settling their debts with those who are owed money.
Chapter 11 is for business reorganization and is likewise filed under the US Bankruptcy Code. It allows a business to reorganize their assets and liabilities and seeks to settle debts that the business owes.
Chapter 13 is a petition filed under the US Bankruptcy Code where an insolvent debtor asks the court to give them additional time to pay off their debts; the stipulation is that they have to be earning a steady income to prove that they can satisfy the debts if given the additional time.
When someone is termed “insolvent,” it means that they are not capable of paying their debts when the debt comes due.
When someone is discharged from their debtor, it means that they are released from their responsibility to pay off their debt.
Why you should hire a bankruptcy attorney
Filing for bankruptcy should never be done without much thought and consideration. Although it can feel like an excellent way to wipe the slate clean, that is rarely the case. Bankruptcy can affect your financial future forever. If you don’t consult an attorney, then you won’t know what you are eligible for and how to proceed with your petition. That can leave you liable and vulnerable to losing your assets when you might not have to. Attorneys know how to broker the bankruptcy so that you aren’t left unprotected or with nothing.
The long-term benefits for someone who files bankruptcy might not be as great as they appear. Your financial situation will be altered for a very long time — if not forever — and it might not always be the best solution for your individual situation. If you hire an experienced lawyer, they can better prepare you for the long road ahead.
No one wants to admit when they are in too far over their head. But if you have bills that continue to mount and don’t see a way out of the debt you are in, the best place for you to start is to find the right attorney who will have your best interests at heart. Not only can they evaluate whether petitioning for bankruptcy is a good idea for you overall, but they can also help to walk you through the complexity of filing and the management of the proceedings that will follow.