Unfortunately, with the state of the economy, more and more people find themselves in situations of mounting debt. In fact, last year over 1 million people in the United States filed for bankruptcy. Bankruptcy can stop foreclosure of a home or cease calls from debt collectors. People believe that bankruptcy is the only alternative to help them get their life back on track. Bankruptcy law is a federal legal practice for a person or business that cannot pay their creditors and needs to get rid of their debts. For most people, bankruptcy is a last resort and should only be used when there is no other option. One of the main reasons’s for bankruptcy law is to give a person a fresh start by wiping out their debts. The main downfall of bankruptcy is that it can ruin a person’s credit or shut down one’s business. However, there are specific court proceedings that sometimes allow a person to stay in business and apply income from their business to pay the debts. Bankruptcy law is carried out in the United States bankruptcy courts. Sometimes bankruptcy proceedings are voluntarily entered into by a debtor or other times it is instigated through creditors. Once a bankruptcy proceeding is recorded, creditors may not try to collect dues outside of the court. In addition, the debtor is not permitted to transfer assets that have been deemed part of the estate. There are different types of bankruptcy proceedings. The most common type of bankruptcy is chapter 7 bankruptcies or liquidation, in which the debtor turns over all non-exempt assets to the bankruptcy trustee and the proceeds are dispersed to creditors. Filing a petition of bankruptcy suspends all present legal actions and is frequently used to pre-empt foreclosure. Many people who choose bankruptcy do so to avoid foreclosure on their home. When this is the case, it is important to have a foreclosure attorney that you can trust. A foreclosure attorney can help a person understand their options when faced with losing their home. When the court officially announces a person or group bankrupt, they cannot file bankruptcy for 9 years.
Chapter 13 bankruptcy is when individuals have the chance to repay some or all of the debts on their terms. For example, they could negotiate lower interest rates. This entails reforming debts so that it allows the debtor to use whatever income they might have in the future to reimburse creditors. A person must pay back the creditors within 5 years.
Chapter 11 bankruptcy permits a business to adjust and refinance to avoid final collapse. The finishing plan usually demands creditors to get only a small part of the debts that are due them or to obtain a payment over an extended period of time. Once a business is given bankruptcy protection, it can eliminate contracts with companies and clients and evade litigation.
Bankruptcy is very complex, so most people find a good and experienced bankruptcy lawyer. Attorneys that focus on bankruptcy proceedings are experts in all of the paperwork and legal proceedings that the law demands. Furthermore, a bankruptcy lawyer can help an individual decide what type of bankruptcy is best for them.
Chris Bartopherton writes for writes for several blogs and websites including Naperville Foreclosure Attorney and Naperville Bankruptcy Lawyer.