Ask anyone about bankruptcy and they will claim to know quite a bit about it, but no one other than a lawyer can give you the complete picture. A common man attempting to answer bankruptcy questions will only be able to cite the latest bankruptcy cases in town and share the court verdict. The only way you can get a comprehensive view of this federal law is with the help of a lawyer who will make sure you have understood bankruptcy completely. A pertinent question here is why do people face bankruptcy in the very first place? What are the reasons that lead to bankruptcy? And what would be the ideal legal way out in each case? Here is a quick attempt to answer the above questions.
Mass lay-offs and cutbacks that led to unexpected financial crises are the two main reasons behind the steep increase in number of bankruptcy cases recorded in the past five years. Other than these, there are reasons like prolonged illnesses and less-than-perfect financial planning which account for bankruptcy. In each case, seeking legal attention at the right time will relieve the victims of this strained financial condition and help them save more than they initially expected. How does the process come around?
The process begins with the hiring of a bankruptcy attorney who files the petition on behalf of his client in court. According to the Bankruptcy Code, there can be three main approaches in solving a bankruptcy case. The three main approaches that a court will adopt in order to address a bankrupt situation are Chapter 7, 11, and 13 bankruptcy codes.
Under Chapter 7 code, debt relief is attained by putting up for auction the assets in possession of the petitioner. The money obtained from the auction is used to clear the debts. Under Chapter 11 code, the business is not terminated entirely. The owner is allowed to re-organize the business and hand it over either partly or completely to the creditor, thus attaining debt relief. This approach is ideal for businesses having a promising market presence and prevents complete shut-down of the establishment. Chapter 13 is however, the best approach where the looming deadline for debt clearance is postponed. All money payment to the creditor is canceled in the interim period, allowing the debtor to re-organize and start afresh with his present finances and clear the debt over an extended time period of around three to five years.
With the help of an experienced bankruptcy attorney, Covington, GA area petitioners can benefit from timely and proper legal assistance. This can help them to tide through financial crises without losing all or part of their existing financial assets.