Many turn to Bankruptcy as U.S. Comes out of Economic Downturn

Insurmountable debts can cause small or newly established businesses to fail or individuals to suffer from incredible amounts of worry and stress. Seeking legal shelter which would lead to freedom from debt and restored financial control and stability is within anyone’s reach, though; many are just not totally aware on how to go about it.

All across the US, people and businesses experiencing overwhelming financial crises have the option to file for bankruptcy. Everyone ought to know that the US has bankruptcy laws which have been created to offer relief to those with crushing debts – to give them control over their financial future.

Whether for you, personally, or for your business, there are bankruptcy options that will help you or your business regain financial confidence. One option available to those looking for relief is filing for Chapter 7 bankruptcy, a liquidation bankruptcy process which others also call straight bankruptcy. Chapter 7 is one effective solution to solving or minimizing any debt crisis.

Individuals who own properties can apply for this type of bankruptcy. Though some of their assets could potentially be sold by a court-appointed trustee to pay their creditors, there are some assets that they can identify as exempt properties to keep these from being sold. Besides freeing them from their dischargeable debts, some of which are personal loans, debts due to medical bills and businesses, and credit card debts, court-approved bankruptcy application also prevents creditors from communicating, threatening or making any collection from the debtor; this means no lawsuits, telephone calls, wage garnishments or anything that would relate to collection of payment.

Anyone can file for Chapter 7 bankruptcy, so long as he or she has passed the means test – an effective way of keeping those with high income from being eligible to file. The means test was introduced in 2005 by the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which is the most substantial improvement to the bankruptcy laws ever since 1978. Although Chapter 7’s goal is to free you from your dischargeable loans, another discharge is no longer obtainable if the previous one that you received was no more than eight years ago.

Companies that file for this particular bankruptcy will have to stop operations and go out of business, except if allowed to continue by the appointed trustee. All of the company’s assets will have to be sold and the proceeds distributed to all creditors, beginning with the investors, then the unsecured creditors and lastly, the secured creditors whose credit is backed by collateral; this system of payment is known as absolute priority.

A business bankruptcy case takes time, is quite stressful and expensive; it’s worth the filing for, though, as there are businesses which have become better after the case. A bankruptcy case is tried only in a federal court; state courts have no jurisdiction to hear it.

Leave a Reply

Your email address will not be published. Required fields are marked *