When people hear the word "bankruptcy," they often feel scared. For years, the word has been used to mean being poor, unable to pay bills, and worried about money. But is that all there is to bankruptcy? The truth is that many people don't really know what bankruptcy is. For many people, bankruptcy is a way out of a bad situation and a helping hand when they need it most. It is also an experience that changes your life. These questions and answers are meant to teach you about bankruptcy, including what it is, what it can do, and what it can't do.
How does bankruptcy work?
A bankruptcy is a legal statement that you can't pay your debts. This doesn't mean that you are broke. Many people who file for bankruptcy, on the other hand, have enough money to live on. Instead, it means you don't have enough money to cover your basic living costs and pay back money you owe to other people. How much this is depends on the person, since everyone needs a slightly different amount of money to pay for their daily needs. Since there is no set amount, a judge usually decides who can file for bankruptcy.
How do I start the bankruptcy process?
Laws change from state to state, but it's not hard to file for bankruptcy. At its core, it's just filling out the paperwork for bankruptcy. On this paperwork, you will be asked about things like how much money you make now and what assets you own. The bankruptcy judge will use this paperwork to decide if you are eligible for bankruptcy and how it will affect you. Before you fill out this paperwork, you might want to talk to a lawyer. A lawyer can tell you what kind of bankruptcy would work best for you and help you figure out some of the details.
How will filing for bankruptcy help me pay my bills?
There are many kinds of bankruptcy, and each one works in a different way. There are different kinds of bankruptcy for businesses, and some of them can help people. In general, one of three things will happen if you have to file for bankruptcy. Either you'll have to pay a set amount each month until your debts are paid off, your assets will be liquidated and sold to pay off your debts, and you'll pay a set amount each month to cover the rest, or your assets will be sold and you'll be free of any more debt. With any of these choices, creditors can't try to get more than what was agreed upon.
How many different kinds of bankruptcy are there?
Chapter 7 and Chapter 13 are the most common types of bankruptcy. Chapter 7 bankruptcy is a simple way to get rid of debts. This is when the court sells your property and uses the money to pay off your debts. After that, creditors can't try to get any more money from the person. Chapter 13 bankruptcy is a payment plan for getting back on your feet. This kind of bankruptcy is for people who have a steady source of income. It gets rid of debts up to a certain date and sets up a payment plan for the rest. In Chapter 13 bankruptcy, assets are not sold off, but you do have to pay back a certain amount each month.
When a business files for bankruptcy, what happens to it?
Basically, the same thing happens to them as it does to people. Either the business is shut down, its assets are sold, and its debts are paid off, or a payment plan is set up and a certain amount is paid each month. The only difference is what is considered "disposable income" in Chapter 13 bankruptcy. Most of the time, "profits" are taken to mean "disposable income" for businesses, but there is still some room for change here. Some business owners who are less than honest will quickly give themselves a raise before filing, making it look like they make less money than they actually do. But, besides a few small differences, it's pretty much the same for a business as it is for a person.
