Bankruptcy Information

Bankruptcy is state of complete lack of some abstract property:spiritual bankruptcy, moral bankruptcy, intellectual bankruptcy.

It is inability to discharge all your debts as they come due; "the company had to declare bankruptcy"; "fraudulent loans led to the failure of many banks".

Bankruptcy is a legal process intended to insure equality among the creditors of a corporation declared to be insolvent. It is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. A declared state of bankruptcy can be requested or initiated by the bankrupt individual or organization, or it can be requested by creditors in an effort to recoup a portion of what they are owed.

Generally for consumers, there are two types of Bankruptcies, viz; Chapter 7, which is total liquidation, and Chapter 13, that is reorganization, where a portion of your debts are repaid.

Chapter 7 bankruptcy, also known as straight bankruptcy is a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. The debtor receives a discharge of all dischargeable debts usually within four months. In the vast majority of cases the debtor has no assets that he would lose so Chapter 7 will give that person a relatively quick "fresh start".

Chapter 13 Bankruptcy is also known as a reorganization bankruptcy. Chapter13 bankruptcy is filed by individuals who want to pay off their debts over a period of three to five years. This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep. It is also only an option for individuals who have predictable income and whose income is sufficient to pay their reasonable expenses with some amount left over to pay off their debts.

Your Bankruptcy lawyer should be able to help you with this question. In general, if after taking into account your monthly financial statement, including all your reasonable bills, if you still have money left over to make a contribution towards your debt, then a Chapter 13 bankruptcy might be best. If you do not have any excess income after paying your monthly minimum expense, then a Chapter 7 can be the best option for you.