If you are wondering What is bankruptcy? then you are in the right place, Bankruptcy is a legal procedure in which people and businesses which are unable to pay their debts are allowed to pay their debts under some conditions. It’s not the same as declaring personal or business insolvency, which can be done without going through the court system. Bankruptcy gives you time to pay off your debts while protecting creditors from losing money on unpaid bills. There are two main types of bankruptcy – reorganization and liquidation bankruptcies.
Reorganizations, chapter 13 bankruptcy, allow people with regular jobs to keep their homes, cars, and other assets if they have enough income to make payments for three years after filing.
Liquidation, also known as Chapter 7 Bankruptcy, is the most common type of personal bankruptcy. It allows a debtor to discharge all or part of his debts, and it also provides for the liquidation of certain types of property that are not exempt from creditors’ claims in other chapters of the code. The process begins with filing an application for relief under chapter 7; this triggers a series of steps designed to determine whether the applicant qualifies for protection under the law.
. Both kinds of bankruptcy require approval by a judge before it takes effect. If approved, the debtor will receive a discharge order to start paying back what they owe.
. The time required varies depending on how much debt there is and whether the person has filed for Chapter 7 or Chapter 13. In some cases, a creditor may ask the court to extend this period to make more payments. This extension is called “deferral.” A deferral does not mean that the individual or company cannot file again later; rather, it means that the original deadline must be extended until the new date
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Bankruptcy is not an easy process. It requires careful planning and preparation before filing. If you have questions about how to proceed, contact a qualified attorney today.