How the Bankruptcy Process is Handled by the U.S. Court System
Bankruptcy provides a fresh start for those who are no longer able to pay their debt. If you are an individual or business that has been struggling to pay your bills and is no longer able to meet your financial obligations, you may be looking at bankruptcy as a possible solution to get out from under your debt. Here, we provide an overview of bankruptcy and what you can expect during the process.
If you are thinking of filing bankruptcy and would like more information, contact The Debt Doctors. Our Missouri bankruptcy attorneys will assess your situation, discuss your options, and help you determine whether bankruptcy is right for you. Schedule your free initial consultation today by calling (417) 466-3328.
What is Bankruptcy?
Bankruptcy is a legal process in which a judge and court-appointed trustee examine the assets and liabilities of the individual or business and ultimately decide whether the debtor is eligible for bankruptcy and, if so, whether to discharge the debt. There are three main types of bankruptcies, referred to by their chapter in the U.S. Bankruptcy Code.
A Chapter 7 bankruptcy is often referred to as a “liquidation bankruptcy” and is most commonly used by individuals who can’t repay their debt or businesses that choose to cease operations. Within the process, nonexempt assets are sold off, and the proceeds are used to repay creditors. Chapter 7 is the most common form of bankruptcy as it is the quickest and simplest option.
In a Chapter 11 bankruptcy, a company’s debt is “reorganized.” Though the business must restructure its obligations, a Chapter 11 bankruptcy allows the company to remain intact and continue its operations. This form of bankruptcy is almost exclusively used by businesses. However, in rare cases, high-asset individuals who don’t qualify for Chapter 7 or Chapter 13 bankruptcy may be eligible for Chapter 11.
Available to both individuals and small businesses, a Chapter 13 bankruptcy allows a debtor to repay all or part of their debts. Debtors must agree to and fulfill the terms of the repayment plan, which typically includes payments lasting three to five years.
Which Court System Handles Bankruptcy Cases?
Federal courts have exclusive jurisdiction over all forms of bankruptcy as the process is governed by the Federal Rules of Bankruptcy Procedure. Bankruptcy is a federal law matter, and the rules and procedures are nearly identical in every state. However, state law does play a limited role. For example, some states set their own property exemption laws, determining which assets a debtor gets to keep or forfeit.
All 94 federal judicial districts oversee the legal process, covering all U.S. districts. Federal law requires that all bankruptcy cases must be filed and heard in the judicial district in which the primary residence or place of business is located.
How to Determine Which Bankruptcy Is Right for You
Each form of bankruptcy has its advantages and disadvantages. Determining which is best for your unique needs is best done with the guidance of a knowledgeable bankruptcy attorney. Your lawyer will ensure your financial struggles are resolved by the appropriate form of bankruptcy and help you through the entire process. Working with a qualified bankruptcy attorney will allow you to make the most of the benefits that bankruptcy offers, ultimately putting you in the best financial position possible.
Speak with an Experienced Bankruptcy Attorney in Missouri
Filing Bankruptcy is never an easy choice. As with any decision, there are pros and cons that must be considered. That is why it is critical to make an informed decision. We encourage you to take the time to learn what the bankruptcy process looks like, what the advantages and disadvantages are, and what effects bankruptcy will have on your future.
With over 25 years of experience handling more than 3,500 bankruptcy cases, you can rest assured we can help no matter the situation you find yourself in. We handle Chapter 7, Chapter 11, and Chapter 13 bankruptcies and will guide you through the process to help you get out from under your or your business’ crippling debt. Schedule a free, confidential consultation today by contacting The Debt Doctors of Missouri online or calling (417) 466-3328.