You must have come across many cases if bankruptcy occurring in the area you live in. The number has increased manifold number of times due to the hard blow that the world economy received during the recession. How does bankruptcy work? Firstly, it is a legal step to declare the incapability of a firm or company to clear the debts that it is in. The creditors are served a legal notice that states that their debtor is bankrupt, and will follow course of action as demarcated by the court.
The entire process of this declaration is according to dictates of the code under which the case has been registered. Usually when one company or business realizes financial exhaustion, the management hires the services of a bankruptcy lawyer. The main role of the bankruptcy lawyer is to apply for bankruptcy by creating a case file under bankruptcy law. There are three main codes under which the case will be registered. The mode of legal action depends on the code that the court decides suitable for the case. Here is a quick look into the three main types of bankruptcy codes that have been found to be used in most bankruptcy cases.
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Chapter 7 Bankruptcy
Cases that qualify under this code are allowed to reduce their debt amount. This is done through liquidation of assets. In this approach, the sale-able property and assets of the business owner is put up for sale in the market. The amount of money that is earned through this sale of property id used to pay off most part of the debt.
Chapter 13 Bankruptcy
Under this code, the business owner or individual applying for the bankruptcy, is granted extra duration for clearing his debts. The period of debt clearance is increased and the duration granted usually ranges from three to five years. This reduces the pressure of debt clearance every month. This duration is decided basing on two factors viz. The capability of the business to revive its performance in the market, and the amount of debt itself.
Chapter 11 Bankruptcy
Many businesses are found to be in a state wherein they are confident and capable of doing well in the market and reorganize the debts and repay the amounts through business income. This mat include rearranging their assets to bring both the business and the financial state back in good shape.
Thus, while filing for bankruptcy, Cocoa residents need to keep in mind the fact that only through the services of a thoroughly experienced lawyer will they be able understand and tide over these rough times.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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