Bankruptcy is a legal procedure initiated by a specific or a service that can not pay their debts and seeks to have the financial obligations discharged or reorganized by the courts. The 3 most common types of insolvency procedures are Chapter 7 specific petitions, Chapter 11 company reorganization and rehabilitation petitions, and Chapter 13 wage earner's strategies. Insolvency cases almost specifically fall under federal law, though states may pass laws governing issues that federal law does not deal with. Special personal bankruptcy courts nationwide handle just debtor-creditor cases. Typically, any bankruptcy-related claim must be submitted with the U.S. Insolvency Court. Terms to Know Personal Bankruptcy Petition - The file filed with the U.S. Personal bankruptcy Court that starts an insolvency proceeding; generally includes the debtor's assets, financial obligations, and other liabilities Chapter 7 (Individual Personal Bankruptcy) - A petition submitted under Ch. 7 of the U.S. Bankruptcy Code for a specific debtor to liquidate his or her assets and settle or release debts Chapter 11 (Organization Reorganization) - A petition filed under Ch. 11 of the U.S. Bankruptcy Code for a service to reorganize its liabilities and properties, in addition to settle or discharge its financial obligations Chapter 13 (Wage Earner's Plan) - A petition submitted under Ch. 13 of the U.S. Insolvency Code where an insolvent debtor might ask the court to give additional time for the debtor to settle his or her financial obligations, so long as the debtor is earning a steady earnings Insolvent - Unable to pay one's financial obligations as they come due Discharge - To release a debtor from his/her liability to pay a debt For more legal meanings, go to the Findlaw Legal Dictionary.Learn more about FindLaw's newsletters, including our terms of usage and privacy policy.
Although a lot of lawyers are complimentary to request approval to practice in U.S. Insolvency Court, effectively representing insolvency clients needs thorough understanding of the U.S. Bankruptcy Code. Lawyers without the proper experience might not know all of the alternatives offered to a customer facing personal bankruptcy, and as a result, they might not be able to broker the most useful insolvency strategies.
Insolvency procedures can have long-term advantages and repercussions for a person's financial and household circumstances. This is another factor why finding a knowledgeable attorney is necessary. An attorney who has actually helped lots of clients through personal bankruptcy can better prepare Browse this site you and secure your assets and lessen the unfavorable effects. If you are facing personal bankruptcy, get in touch with a bankruptcy legal representative immediately to maintain your legal rights and explore your legal options.