Bankruptcy And Debt Lawyers

Are you struggling with your finances and want to opt for Bankruptcy? Bankruptcy is a double-edged sword, and there are several things to take care of to make it beneficial for you. Bankruptcy in the U.S. follows a law called the Bankruptcy Code, which explains how people and businesses can deal with debts they can’t pay or are unable to pay. It is a set of rules drafted to deal with bankruptcy cases and limit individuals to take undue advantage of this process. Let’s discuss this topic in detail.

What Is Bankruptcy?

Bankruptcy is a process of dealing with debts and loans. In simple words, it is a legal process of seeking relief from your debts and declaring yourself unable to pay off your loans. In this process, all or majority of a person’s loans are forgiven, and they can begin a fresh journey. However,  it is a complex process, and in a very rare case, all loans are forgiven. There are several types of bankruptcies people opt for in the United States; they are discussed in the next section.

Different Types Of Bankruptcies

According to the United States Bankruptcy Code, Bankruptcy can be classified into six major categories; they are as follows:

1. Liquidation Bankruptcy (Chapter 7)

It is used by both individuals and businesses. In this regime, most debts are wiped out in lieu of liquidating some assets. Asset liquidation is not mandatory; it happens based on your financial condition. This method is generally adopted by people who can’t pay anything back.

2. Repayment Plan (Chapter 13)

It is opted for by individuals with regular income; they can extend the loan repayment timeline, reduce their liability to an extent, and take legal help to pay off their debts with more liberal terms.

3. Business Reorganization (Chapter 11)

This scheme is related to businesses that are unable to settle their debts with their current finance structure and are looking for some major changes to strengthen their financial position. It works as a booster for companies and helps them avoid shutting down their operations.

4. Farmers & Fishermen (Chapter 12)

It is a specific type of Bankruptcy designed for farmers and fishermen who require more time to repay their debts. It is similar to Chapter 13 provisions but with modifications to farmers' and fishermen's eligibility.

5. Municipalities (Chapter 9)

This Chapter is relevant for municipalities and local governments who want to reorganize their debts without getting their assets liquidated. 

6. International Cases (Chapter 15)

This Bankruptcy Law Chapter is relevant for foreign companies and individuals with assets in more than one country, i.e., The United States. These types of cases are generally the most complicated ones, as they involve legislature bodies of the United States and other countries.

How To File Bankruptcy In The United States?

Filing Bankruptcy in the United States is a long and complex process; it comes with numerous benefits, such as reduced loan liability, extended time limit to repay loans, and more. However, to get the maximum benefits, you need to file for Bankruptcy by following the right process; here is the step-by-step breakdown of this process:

1. Evaluating The Need 

The first step is to evaluate the need for Bankruptcy, as you would be required to prove in court whether you are qualified to get bankruptcy benefits or not. Bankruptcy is not the only option for debt management. Actually, it is the last one, so consider other options as well, such as:

• Debt consolidation

• Credit counseling

• Negotiation with creditors

If none of them work for you, then opt for bankruptcy.

2. Legal Requirements

If you choose to opt for filing for Bankruptcy in the United States, then there are certain legal requirements you need to fulfill, such as:

• Completing a credit counseling course from an approved provider within 180 days of filing for Bankruptcy in the United States.

• Collect financial documents like income information, tax returns, lists of debtors, assets and properties, monthly living expenses, bank statements, and more.

3. File The Bankruptcy Petition

Now, it's time to file the bankruptcy petition with the authorized authorities; you will need to complete the following things:

• Choose the bankruptcy chapter and fill out the form

• Submit the required fees; it will depend on the bankruptcy chapter you are falling in

• Complete the Means Test to determine your eligibility 

4. After Filiing Process

Filing for Bankruptcy is a serious concern for creditors. You will be required to fulfill various other tasks to ensure the safety of creditors and the justice of claims. You should hire a good lawyer to do everything smoothly.