Bankruptcy is when a federal court procedure assists in either a business or consumer get rid of debts and repay creditors.
If someone qualifies for bankruptcy the courts can help protect that person during the proceedings that follow. Bankruptcies will fall into two types of categories. Liquidations and reorganizations. The most popular forms of bankruptcies will be that of chapter 7 and chapter 13. These are the most frequent in terms of consumer and business when they file for bankruptcies.
Chapter 7: Businesses and individuals are allowed to file for chapter 7. Chapter 7 typically falls under the liquidations category and means that property could be sold off to pay back loans.
Chapter 13: This allows only people with a healthy source of income to file for chapter 13 bankruptcy. This falls under the reorganization category and most of the time people are able to keep the property, but they must stick to a plan that will allow the repayment of debt.
Use an attorney to help navigate these times. Filling for bankruptcy is never an easy time so getting help from an experienced attorney to help navigate the ins and outs will make this process a little less stressful« Back to Glossary Index