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Bankruptcy Law – Filing Bankruptcy
What is Bankruptcy?
Bankruptcy is legally declared inability or impairment of individual or organization to pay their creditors. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Involuntary bankruptcy are cases when creditors file petition against debtor in an effort to recoup a portion of what they are owed or initiate a restructuring. And voluntary
Bankruptcy can discharge majority of debts, and you are eliminated of legal obligation pay rest of your debts, basically company gets a fresh financial start. Bankruptcy can stop foreclosure on your house and allow you to catch up on missed payments.
However bankruptcy cannot cure all of companies financial problems, nor is it right step for everyone and should be heavy reconsidered,
Bankruptcy cannot wipe out all of your debts like money owed for child support, alimony and some taxes, nor other debts listed in your bankruptcy petition like debts resulting from willful and malicious harm.
There are four types of bankruptcy cases provided under the law:
- Straight Bankruptcy or liquidation – you file a petition asking the court to discharge your debts
- Adjustment of Debts – you file a plan showing a way how will you pay some of your current debts over past three of five years, important part is that you may be allowed to keep your valuable property like home or/and car.
- Reorganization – is used by business companies that have very large debts behind them
- Family farmer debts – reserved for family farmers.