As one of the most recognized legal terms, Bankruptcy is a subject most people have some familiarity with. Not to say that everyone or even most people have any direct connection with it, but it is an area that is understood at the most basic level for most people. This basic understanding can be deceiving, though, as bankruptcy is a very complex and intricate part of the legal profession.
In the simplest sense, bankruptcy involves any situation in which a person, persons or business is able to forgive debts they cannot repay. There are different options depending on the situation and who is involved, but the right legal counsel can make it easier to understand what best suites your needs. If you are considering bankruptcy, contact us at Williams, Meservy, and Lothspeich, LLP to schedule a consultation. With a team of experienced attorneys, we can assist you in choosing what course of action will produce the best results for you.
The most common bankruptcies fall under Chapter 7, in which a debtor is forced to turn over all “non-exempt” property to satisfy the debt. The property is then sold and the money is paid to the creditors. While the money from the property may not satisfy the full extent of the debt, the balance of the debtor’s loans is completely forgiven and the creditor is barred from attempting to collect the remaining balance.
Falling under the category of liquidation bankruptcy, Chapter 7 is a popular choice, as it allows a debtor to use assets to pay their debt. There are also restrictions that allow a debtor to keep certain items, such as some clothing, household items or tools needed for work.
Unlike Chapter 7, debtors who choose Chapter 13 Bankruptcy aren’t forced to surrender their property. Instead, they agree to pay monthly payments to cover their debt. Falling under reorganization bankruptcy, Chapter 13 allows debtors to restructure certain loans and debts to extend the time for payment and in some cases, reduce the principal. On top of modifying the debts in question, Chapter 13 bankruptcy can also have an effect on other obligations, such as mortgages and student loans.
At Williams, Meservy, and Lothspeich, LLP, we don’t just focus on the debtors. We are also here to assist any creditors who may need our guidance. When it comes to collecting the money they are owed, creditors have certain rights. These rights vary by jurisdiction, but include putting a lien on a debtor’s property, garnishing wages and other methods for securing the money they are owed.