Guide on Bankruptcy in 2021
Many debtors are still terrified of declaring bankruptcy. It takes a lot of energy and requires the help of professionals like Debt Stoppers, specializing in bankruptcy law. Many business owners see it as recognition of their business fiasco. Yet, with a wise approach and professional advice, bankruptcy can save and protect your business.
What is bankruptcy? Why are we afraid of it?
Bankruptcy is the way for individuals or businesses to completely reduce their debts or cut them to pieces while incurring losses. This action is taking place under the supervision of the bankruptcy courts of the United States. Debtors can file for bankruptcy on their own or may be forced to do so by creditors. Debtors unable to pay their debts can file for bankruptcy and prove their point in court.
Types of bankruptcy
There are different types of bankruptcy that you can file for. Some of them are specific and can only be applied in rare cases for farmers in municipalities. Yet, there are also common types that may suit a wider audience. They are:
- Chapter 7. According to her, the debtor must hand over all or most of the property to the trustee, with the exception of exempt property such as household furniture, clothing and small items. The trustee must sell all the property you donated and pay off the existing debt. Once the assets are sold, you can start over from the beginning, without any debt. All are canceled. Yet, if you have school loans, child support, or child support, you will have to pay them.
- Chapter 11. This type of bankruptcy is usually done by a business, and rarely by a debtor who has multiple assets. In this case, you have control over the day-to-day operations of your business. You create the plan with creditors and trustees of how you pay debts and whether they will postpone deadlines.
- Chapter 13. This type allows you to keep all assets intact. Still, you will have to donate a significant portion of your income in the future. The amount of income you will give can be determined by the bankruptcy court or agreed with the creditor. You will pay the money until there is no more debt.
People who file for bankruptcy
Not everyone can do this. Also, not all business owners want to file for bankruptcy. The procedure may not take a long time but will have a lasting effect on the business. If you still want to do this, you need to consider the following aspects:
- If your creditors want to negotiate with you. On this basis, you can file for 7 or 13 chapters;
- Are you sure your liabilities exceed your assets? In the event of bankruptcy, you can lose all your assets;
- Whether this action will affect your reputation and that of your business;
- If you have to take credit in the future.
To classify or not to classify
Bankruptcy can solve many problems that seem to be too important to handle on your own. If you can’t pay your debts, the country can help. Consider all of your options and seek help from a bankruptcy lawyer ahead of time.