Financial distress is one of several alternatives to bankruptcy. Bankruptcy is an opportunity for a debtor to emerge from a financial crisis and start anew each year, declaring bankruptcy is simply a fact of life for millions of people living in the U.S. Visit us on Bankruptcy-Butcher Law Office, LLC.
The statute on bankruptcy is statutory legislation and is approved by Article I, Section 8 and Clause 4 of the Constitution of the United States. The Bankruptcy Law, Chapter 11 of the United States Code, incorporates the fundamental insolvency rule.
By fact, a debtor enters bankruptcy by order to receive debt relief and this is achieved either through creditor recovery or debt reduction. In general, his or her bankruptcy case begins when a debtor files a voluntary petition.
Forms of Insolvencies
Chapter 7 is bankruptcy liquidation also known as straight bankruptcy; it is the simplest and fastest form of bankruptcy available.
Chapter 9 bankruptcy is the form of bankruptcy intended for towns who find themselves in financial difficulty. It is a federal mechanism for town debt resolution.
Chapter 11 bankruptcy known as corporate bankruptcy is a type of corporate financial reorganization that usually enables companies to continue to function by pursuing debt reduction schemes.
The purpose of Chapter 12 Bankruptcy is to adjust the debts of “family farmers” or “family fishermen” with regular annual income. Proposing and implementing a plan to repay all or part of their debts is known as Family Farmer Bankruptcy / Family Fisher man bankruptcy.
Chapter 13 Insolvency is designed for an individual who can not repay his / her debts. It allows people with regular incomes to develop a plan to pay back all or part of their debts. It is also regarded as Poverty of the Salary Earner.
Chapter 15 insolvency is intended to support both debtors and creditors. The aim of this is to provide an effective mechanism to deal with bankruptcy debtors and to help foreign debtors clear their debts.
Chapter 7 and Chapter 13 are the two commonly encountered effective parts in bankruptcies. Chapter 7, regarded as a “pure bankruptcy,” and chapter 13, which includes an acceptable recovery package, are the clauses that nearly often refer to mortgage debtors. Automatic stay is an essential feature which applies to all forms of bankruptcy filings. The mandatory stay ensures that certain litigation, repossessions, foreclosures, evictions, garnishments, defaults, utilities shut-offs and debt collection abuse cease immediately the simple appeal for creditor security and bring to a grinding halt.