Bankruptcy is the formal method of debt relief allowing a debtor to relieve a part or entire of his debt burden. This is a way to say a person has no means of paying off his debts. A debtor ‘s assets are either liquefied or reorganized, depending on the chapter under which a bankruptcy case is filed. A business firm can also face challenging economic conditions and apply for bankruptcy, click for more info.
Filing a bankruptcy is a pretty complicated procedure, because it requires a lot of paperwork and many financial documents presented. A common man can find it difficult to cope with legal proceedings’ complexities. The best solution is to recruit a bankruptcy lawyer. He’s the right person to guide you through that process, right from start to finish.
Cases of bankruptcy typically provide two forms of relief options-Chapter 7 and Chapter 13.
Chapter 7-A trustee is appointed by the court for a debtor who has filed a petition under this chapter of bankruptcy. This option is also called ‘asset liquidation’ as this trustee liquidates some of the debtor’s assets for creditors to be paid out. A debtor, if any, gets to keep his estate exempt.
Chapter 13-This is the most common type of bankruptcy case preferred by most consumers. This is often called an ‘income earner’ because it allows the debtor to convince the court that after a certain period of time, typically 3-5 years, he is in a position to pay off his debts. You can’t have this option because you need a stable source of revenue to pay off your creditors.
It is not advisable to decide for yourself to opt for bankruptcy options. Someone should consult a competent bankruptcy lawyer who will help you understand the complexities.