Bankruptcy is a legal process that an individual or a corporate entity takes to declare themselves unable to meet outstanding debt. There are different chapters and depending on the type filed the bankrupt will meet with a judge to determine a payment schedule or have the bankrupt relieved of most of the debts. It is not only individuals that declare bankruptcy in Royal Palm Beach; it is a legal recourse that is also available for businesses. When a business declares bankruptcy it will either cease trading and go out of business, or it will keep operating, making reduced payments to its creditors.
When an individual or married couple declares bankruptcy they have three choices; the choices are Chapters 7, 12 and 13. The most common type of bankruptcy for those in this position is Chapter 7, Chapter 12 is limited to family farmers or fishermen and although Chapter 13 is an available option it is rarely used by this sector.
When a business declares bankruptcy they have the choice of Chapter 7 and 11. Although less common a company that has international debts that need to be cleared can file for Chapter 15. In the rare case where an agency of the state, such as a municipality or city should declare bankruptcy this will be done under the rules of Chapter 9.
Individuals and small to medium businesses normally elect to declare Chapter 7 bankruptcy in Royal Palm Beach as it results in a clean slate. A business will close when they declare Chapter 7, the individual the courts will declare that he or she is incapable of paying their debt and then almost all debts are declared null and void. The debts that cannot be cleared are certain federal debts such as a student loan which eventually must be paid in full.
When Chapter 7 is declared the bankrupt must prove that their income is insufficient to meet their obligations. Other than for a person’s vehicle and primary residence, all other assets must be declared and are liquidated to pay the debtors partially. The vehicle and home can be lost as well if these assets have alien against them which cannot be satisfied. Most people elect to declare Chapter 7 because they have reached the point where they have little to lose. Once the judge approves the filing, the individual has the slate wiped clean; credit card debt, medical expenses, etc are cleared.
Bankruptcy is a costly way of clearing debt as the credit score of the bankrupt will suffer for years to come; this will make starting over difficult.
If you are considering filing for bankruptcy in Royal Palm Beach you are invited to discuss the details with The Law Offices of Sean I. Koplow. Attorney Koplow can assist with all the various types of bankruptcy available to individuals and businesses.