Filing bankruptcy might seem like a scary thing for most people, but it can be the best decision you ever make. If you are struggling to pay your bills each month and feel like you have nowhere else to turn, then this is the article that will help answer all of your questions about bankruptcy.
It is advisable to check out Roemerman Law for any queries. They are known to help out in the direst of situations.
What is bankruptcy?
Bankruptcy is when a person or company cannot repay their debts. It can also mean that they cannot pay for basic living expenses like rent, food, and health care bills. Filing for either type of this will allow you to liquidate all of your assets to pay off your debts or have a court order that requires creditors to stop harassing you.
What are the different types of bankruptcy?
Types of bankruptcies include personal bankruptcy (for individuals) and business bankruptcy (for companies).
Personal bankruptcy is when individuals file for protection from their creditors because they cannot repay what they owe. There are two main types of personal bankruptcies: Chapter 13 and Chapter 11.
In a Chapter 13 bankruptcy, you have to submit a repayment plan that requires you to pay back as much of your debt as possible over three or five years. If the court approves this repayment plan, creditors are legally barred from taking action against you for at least another year (the length can vary).
Chapter 11 is when a company cannot repay its debt, but it does not necessarily mean closing. It can also be an option for companies struggling financially but still have some assets or savings they can use to restructure their debts and get back on track.
What about businesses?
Businesses might choose to file for Chapter 11 bankruptcy to restructure their debts, which will allow them more time to repay what they owe and a better chance of actually being able to do so. Usually, businesses that go through this type of filing are still operating and have some valuable assets or savings is can use as collateral while going through the process.
What will filing bankruptcy do to my credit score?
Since your creditors no longer have the right to pursue you for repayment, filing for either personal or business bankruptcies should not cause a long-term impact on your credit.
Filing for bankruptcy can be a difficult decision, but it is one that you should not take lightly, given the current state of your financial affairs.