Bankruptcy Law

Bankruptcy law governs both personal and business bankruptcies. Bankruptcy is the process through which a person's or business's debts are prioritized and settled through court-managed negotiation. A skilled bankruptcy attorney can help make sure that the process is smooth and that at the end of the process, all debts are addressed. There are several different types of bankruptcies covered by different chapters.

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 14, 2021

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Overview

  • Bankruptcy law involves both business and consumer (or personal) bankruptcy.
  • Once you enter bankruptcy, a court will determine the priority and amount of debt you must pay.
  • Bankruptcy is complicated and will require the assistance of an experienced attorney, especially for businesses rather than individuals.

Bankruptcy law is divided into two general areas — business bankruptcy and consumer bankruptcy.

Business bankruptcy applies to collection and debt associated with different types of companies, whereas consumer bankruptcy is reserved for individuals with debt problems. While these two general categories of bankruptcy may seem easy to differentiate, various factors can complicate a filing.

For example, if a person runs a small business and frequently commingles business funds and expenditures with personal funds and expenses, their creditors may be able to draw the business into consumer bankruptcy.

If a person can afford to pay some of their creditors, they may want to use bankruptcy to restructure debts. This means that they pay out what they can over the course of the bankruptcy. At the end of the bankruptcy, creditors can no longer harass them to pay the debt.

If a debtor is in such dire circumstances that they simply cannot afford to repay anything, the bankruptcy court may be able to wipe out their debts entirely.

Whether a business or personal filing, the first step is to decide which chapter of bankruptcy is applicable to your situation. If that seems like a daunting task, you may need to make your first step finding an experienced bankruptcy attorney. You can start your search for a bankruptcy lawyer near you with our FREE search tool.

Types of Bankruptcy

The most common types of filings include Chapter 7, Chapter 13, Chapter 11 and Chapter 12.

Chapter seven is available to both individuals and business owners and involves a complete liquidation of a debtor’s assets to pay creditors. Chapter 13 is primarily for consumers and is structured around a repayment plan that allows a debtor to stop creditor harassment while paying off debts over a specified time period. Chapter 11 is used by businesses to reorganize debt so that they can remain in operation. Chapter 12 is specific to family farms and fishermen in need of economic relief from debt, this is executed through a full or partial repayment plan. 

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Hiring a Lawyer

While an effective tool for consumers to resolve burdening debt issues, bankruptcy is accompanied by complicated laws and filing processes and tends to be administrative in nature.

Because of this, it comes highly recommended that debtors consult a bankruptcy attorney before diving in. You can begin your search for a bankruptcy attorney with our FREE search tool right now.

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Find the right lawyer for your legal issue.

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