General Information

Bankruptcy is basically the official way of announcing that a person can no longer repay his debts in his current situation. Consequently, it is also a plan that allows the borrower to resolve his debts by dividing all his assets between his creditors. The process of dividing the said assets is duly supervised, all for the purpose of providing equal partition among creditors.

The main purpose of bankruptcy is to provide the debtor with a fresh start in his finances, while making sure that he was able to play his creditors in the best manner he can. All the proceedings involving a bankruptcy procedure should be in accordance to the Bankruptcy law of America.

An individual or a company is eligible to apply for bankruptcy, provided that they exhibit the need for it. For one, the borrower filing bankruptcy should effectively show the Bankruptcy Court that he definitely has no other assets to cover his debts with. And that filing for bankruptcy is the only way he can stop the debt from accumulating interests. Debtor should also show the Court that his income is not likely to improve at anytime in the near future, and that bankruptcy is the only option left for them.

The bankruptcy law has different chapters that accommodate every sector in the society. The most commonly used one is Chapter 7 of such law. This covers all entities, individual, partnership, or corporation that demonstrates the need to file for bankruptcy. However, if you are a self-employed individual, you have to file Chapter 13 of the bankruptcy.

On the other hand, if you are the owner or shareholder of a big company that needs to file for bankruptcy but wishes to continue business operation, Chapter 11 is most applicable. Chapter 12 is for family fishermen and farmers, while Chapter 9 is for government municipalities.

Nevertheless, every nation of the world implements different rules as far as filing for bankruptcy is concerned. But they all basically follow the same principles. Most of the time, legal counseling is required. A person who wishes to file for bankruptcy needs to hire a bankruptcy attorney to assist him with the procedures and represent him in the Bankruptcy court. And after all the papers have been signed and the bankruptcy procedure approved by the court, the debts are addressed as stipulated. A series of meetings with the creditors is important to ensure both parties are benefiting from the procedure.