Bankruptcy
laws are designed to assist people who no longer have the capability to pay
their creditors. Those who file for a US bankruptcy
petition can get another chance to pay their debt through liquidating
assets or come up with a different repayment plan.
Troubled businesses can also file for US bankruptcy
petition to make a more organized system through liquidation or
reorganization to pay their creditors.
Only
Federal courts have jurisdiction over cases involving bankruptcy laws, which is
why you can’t file a bankruptcy case in a state court.
To start a bankruptcy case, the
debtor should first file a petition with the bankruptcy court. The petition
could be filed by an individual, a corporation, a couple, or other entity. The petition includes the debtor’s statement
listing of his or her income, assets, liabilities, and all of the names and
addresses of his or her creditors as well as the amount of money he or she owes
each respectively.
When the debtor has filed the
petition, debt collectors can’t do any action to collect the debt, even calling
the debtor. The debtor’s property will also remain safe from collection. The
creditors also can’t file or continue a lawsuit against the debtor.
After filing for bankruptcy, the
clerk of court will notice the creditor that the debtor already filed for
bankruptcy.
There are bankruptcy cases that
liquidate the property of the debtor, while others file for bankruptcy to find
an alternative repayment scheme to their creditors.
Liquidation usually leads to
discharge of the debtor from the debts, because his or her property does not
amount to his or her debts to the creditors. Since, there is no other way for
him or her to pay the debt, the debtor gets absolved from it. There are other
cases when bankruptcy case litigation can arise from disputes after the
liquidation of the debtor’s properties.
To make sure that you get the
most from your US bankruptcy
petition, it would be best to consult or hire an attorney.