It is easy to think of bankruptcy as the end of a series of financial failures, especially when the pressures of debt have eroded your quality of life. But bankruptcy is designed to be a new beginning and a clean slate for people who are being harassed by creditors or buried under obligations.
- How do people and businesses qualify for bankruptcy rulings?
A bankruptcy court must approve a bankruptcy plan after an application, which often has a nonrefundable fee. The importance of a first filing is one of the reasons that legal representation is recommended for bankruptcy proceedings. An attorney may be able to lessen the chances of a debt discharge denial.
- How does a filing work?
A Chapter 7 bankruptcy involves a trustee who often sells off all available assets to cover all possible debts, while a Chapter 11 bankruptcy usually leaves enough assets for most pre-filing operations to keep going. This is why Chapter 11 is often chosen by businesses who want to stay open during and after the process.
- How does Chapter 11 work?
A filer, often referred to as the debtor in possession, must provide all available personal and professional finance information, including all assets and liability owned by the individual or organization. Then the court will issue a ruling on approval.
- How does a person or company leave bankruptcy?
The bankruptcy, if approved, will exist until the trustee and the court agree that the filer has fulfilled responsibilities under the bankruptcy plan. Then the organization or individual would be free to resume business as usual.