Bankruptcy is a legal procedure in which you declare to a court your inability to pay debts owing. Claiming bankruptcy allows individuals or companies to be free of their obligations while simultaneously allowing creditors to receive payment.
Bankruptcy begins with the filing of a petition, either by the debtor or on behalf of creditors. A judge and court trustee will then examine your assets and liabilities to determine whether your debts can be dissolved, then you may then file for bankruptcy.
Involuntary vs Voluntary Bankruptcy
There are two types of bankruptcy cases: voluntary and involuntary:
1) Voluntary Bankruptcy
You have the option of filing bankruptcy voluntarily, either on your own or with the help of an attorney. To do this, you need to file for Chapter 7 bankruptcy and must meet precise criteria. If accepted, you will be required to liquidate non-exempt assets.
If you are not approved to file for Chapter 7, you can file for Chapter 13 bankruptcy, which requires a repayment plan.
2) Involuntary Bankruptcy
Involuntary bankruptcy occurs when creditors petition the courts to force someone who owes them money into Chapter 7 or Chapter 11 bankruptcy.
To file for involuntary bankruptcy, the debtor must have a substantial amount of unpaid debt.
If the involuntary bankruptcy is against you, accepting bankruptcy as a debt resolution is an option.
Types of Bankruptcy Filings
Chapter 7:
Straight or liquidation bankruptcy, known as Chapter 7 bankruptcy, is a type of bankruptcy that can dissolve most unsecured debts.
When you file for Chapter 7 bankruptcy, the court automatically places a temporary stay on your existing debts and appoints a trustee to liquidate non-exempt assets, to compensate creditors.
As a result, remaining debts are dissolved and creditors will be unable to collect fees, garnish your wages, foreclose on your home, repossess land, evict you, or turn off your services.
Chapter 11:
Chapter 11 bankruptcy allows an individual, sole owners, associations and businesses to be reorganized. The most common users are corporations. The reorganization allows the company to continue operating under control while the debtor fulfills certain obligations.
A company may operate under the ownership of a debtor, also known as a debtor in possession, after filing for Chapter 11 bankruptcy. The debtor in possession takes over the company and is in charge of keeping track of assets, reviewing claims, and recruiting specialists that include accountants, lawyers, and auctioneers.
A Chapter 11 case protects a corporation and its assets while it negotiates new terms with creditors on behalf of Chapter 11 debtors (people or companies who file a bankruptcy case). It is also a method of preparing the company to sell, sell assets, or liquidate in a controlled manner.
Chapter 13:
Debtors may use Chapter 13 to repay all or a portion of their debts under a court-ordered payment plan. Medical bills, credit card debt, and personal loans are the most common debts discharged in a Chapter 13 bankruptcy.
Creditors are prohibited from continuing collection activities if the court approves the repayment plan. This also allows for relief from collection agencies.
The Law Office of Magdalena Zalewski can help you.
The Law Office of Magdalena Zalewski provides progressive clawback solutions for businesses or individuals affected by their clients experiencing bankruptcy and business reorganization plans.
Our practice focuses on representing individual and corporate defendants in bankruptcy preference and debt avoidance, to claim back money that is owed or invoiced to you.
If you would like more information on our services and values, please click here to view our website to see how we can assist you.