Insolvency is a legal procedure started by an individual or a service that can not pay their financial obligations and seeks to have the financial obligations released or reorganized by the courts. The three most typical types of insolvency procedures are Chapter 7 specific petitions, Chapter 11 company reorganization and rehabilitation petitions, and Chapter 13 wage earner's strategies. Bankruptcy cases almost solely fall under federal law, though states might pass laws governing issues that federal law doesn't attend to. Unique bankruptcy courts nationwide deal with just debtor-creditor cases. Usually, any bankruptcy-related claim must be filed with the U.S. Insolvency Court. Terms to Know Personal Bankruptcy Petition - The file filed with the U.S. Bankruptcy Court that initiates an insolvency case; generally consists of the debtor's assets, debts, and other liabilities Chapter 7 (Individual Insolvency) - A petition submitted under Ch. 7 of the U.S. Personal Bankruptcy Code for a specific debtor to liquidate his or her assets and settle or discharge debts Chapter 11 (Service Reorganization) - A petition submitted under Ch. 11 of the U.S. Personal Bankruptcy Code for a business to reorganize its liabilities and assets, in addition to settle or discharge its debts Chapter 13 (Wage Earner's Plan) - A petition submitted under Ch. 13 of the U.S. Insolvency Code where an insolvent debtor might ask the court to approve extra time for the debtor to settle his/her financial obligations, so long as the debtor is making a steady income Insolvent - Unable to pay one's debts as they come due Discharge - To release a debtor from his/her liability to pay a financial obligation For more legal definitions, visit the Findlaw Legal Dictionary.Learn more about FindLaw's newsletters, including our terms of use and privacy policy.
Although many attorneys are free to request consent to practice in U.S. Insolvency Court, efficiently representing insolvency clients requires comprehensive knowledge of the U.S. Bankruptcy Code. Attorneys without the proper experience may not know all of the choices offered to Click for info a client facing bankruptcy, and as a result, they might not have the ability to broker the most useful personal bankruptcy strategies.
Personal bankruptcy procedures can have long-term benefits and consequences for an individual's financial and household scenarios. This is another reason that discovering a skilled attorney is important. A lawyer who has assisted lots of customers through insolvency can better prepare you and protect your assets and reduce the negative effects. If you are dealing with personal bankruptcy, get in touch with an insolvency attorney immediately to preserve your legal rights and explore your legal alternatives.