Insolvency is a legal treatment initiated by an individual or an organization that can not pay their financial obligations and seeks to have the financial obligations released or rearranged by the courts. The three most typical types of bankruptcy procedures are Chapter 7 private petitions, Chapter 11 business reorganization and rehab petitions, and Chapter 13 wage earner's plans. Bankruptcy cases nearly solely fall under federal law, though states may pass laws governing concerns that federal law doesn't address. Unique insolvency courts nationwide manage only debtor-creditor cases. Usually, any bankruptcy-related claim should be filed with the U.S. Personal Bankruptcy Court. Terms to Know Insolvency Petition - The document submitted with the U.S. Insolvency Court that initiates a personal bankruptcy proceeding; generally includes the debtor's assets, financial obligations, and other liabilities Chapter 7 (Individual Bankruptcy) - A petition submitted under Ch. 7 of the U.S. Bankruptcy Code for a specific debtor to liquidate his or her assets and settle or release debts Chapter 11 (Organization Reorganization) - A petition filed under Ch. 11 of the U.S. Bankruptcy Code for a service to reorganize its liabilities and properties, in addition to settle or discharge its financial obligations Chapter 13 (Wage Earner's Plan) - A petition submitted under Ch. 13 of the U.S. Insolvency Code where Click here for more info an insolvent debtor might ask the court to give additional time for the debtor to settle his or her financial obligations, so long as the debtor is earning a constant income Insolvent - Not able to pay one's financial obligations as they come due Discharge - To release a debtor from his/her liability to pay a debt For more legal meanings, visit the Findlaw Legal Dictionary.Learn more about FindLaw's newsletters, including our regards to use and personal privacy policy.
Although many lawyers are free to request authorization to practice in U.S. Bankruptcy Court, successfully representing bankruptcy customers requires extensive knowledge of the U.S. Personal Bankruptcy Code. Attorneys without the proper experience might not know all of the choices available to a customer facing insolvency, and as a result, they might not be able to broker the most helpful bankruptcy strategies.
Bankruptcy procedures can have long-term advantages and consequences for a person's monetary and family scenarios. This is another reason discovering a skilled legal representative is important. A legal representative who has assisted many customers through bankruptcy can much better prepare you and protect your possessions and minimize the negative effects. If you are dealing with bankruptcy, get in touch with a bankruptcy attorney right away to protect your legal rights and explore your legal alternatives.