What Is Bankruptcy?
It is a legal term that can only be solved through legal proceedings. If a company took a big loan and could not pay it on time, they ended up in huge debt, regarded as bankrupt. To get over this problem, a legal practitioner is there to help.
When an industry faces huge losses, bankruptcy is the only way out. Suppose you are trying to manage the situation alone without the help of the proper attorney; then we will face the consequences. In that case, you can meet the consequences as an experienced lawyer only deals with these cases. At first, bankruptcy attorney will study the case carefully, categorize it accordingly, and gather as many legal documents or proof as needed. They will try to move in the right direction to exempt all your dues from the creditors.
A Few Documents Need To Acquire From This Lawyer:
- Firstly, a contract between you and the bankruptcy lawyer as to how long it will take to solve the case.
- Secondly, What will the charge of the lawyer be? Will he charge based on the case or hourly?
- Thirdly, the lawyer will update you on everything about the issue.
- Fourthly, it must provide all the original payment documents to the debtors and not hide any other documents, as it can create blockage throughout the case.
- Lastly, the lawyer will provide all the documents he has acquired through research and briefly explain it.
Types Of Bankruptcy
There are two types of bankruptcy chapter 7 and chapter 13
Now about chapter 7, the debtors need to liquefy their assets to pay off the remaining debt. If he has gold or houses, his lawyer will help him turn into cash to clear all his dues. Now the debtor needs to fill up a form for chapter 7 bankruptcy and mention the asset he is willing to liquidate. The court must cross-check whether the asset can be liquidated to pay it to the creditors. A trustee must be appointed by the court to see whether the creditor received the whole amount as promised by the debtor. In chapter 7, bankruptcy has an advantage: selling all the assets if still a debt will be forgiven.
Now coming to the next section is chapter 13 bankruptcy, where an individual must repay the debt within two years, but he has to pay in total. It doesn’t have any liquidated section for your asset, but your lawyer must take the court’s consent by placing all the proper documents. Now, you need to get the court’s acceptance to come under chapter 13. The documents you need to provide to the court are
- Your Income Receipts,
- Receipts Of The Amounts Taken From The Creditors.
- Detail About Your Business
- Reason For The Debt
- Tax Information, If Any Taxes Remained Unpaid.
To deal with these cases, you must have the guidance of an experienced lawyer who has in-depth knowledge of these cases and will help you clear all your dues without embarrassment. The creditors will try to take the upper hand, but your lawyer must be strong enough to include you in a specific chapter in which you will benefit.
How To Prevent Bankruptcy?
If an individual is running a business, then bankruptcy is the ultimate distress he will face. Chap 7 bankruptcy will put someone out of the company as they are selling all assets, but in chapter 13 bankruptcy, there is a chance to run your business further as you don’t need to sell your assets.
- If you are the head of your organization, try to maintain the ledger and go through it; try not to rely on anyone blindly. If your company is running into losses, try to clear debts before going further.
- Try to clear out all the essential bills of the company with whom you are on good terms by selling your asset.
- Plan accordingly; try to get help from an expert who can lead you to the correct path and save you from massive debt. All the business decisions are made by looking into proper business plans, which will help to gain more capital.
- If you spend on providing huge lunches or organizing significant events, try to cut those short.
- Try to plan for new business ideas which will be helpful for you to repay your debts.
Lawyers can help you get over this problem, so try to hire the best lawyer who can give you fruitful results.