Thomas K. McKnight LLP - Bankruptcy Attorney in Orange County

What Is Bankruptcy?

Bankruptcy is a legal proceeding involving an individual or business that is unable to pay back their outstanding debts. The bankruptcy procedure starts with a request filed by the debtor, which is most common, or on behalf of lenders, which is less common. All of the debtor's assets are measured and evaluated, and the assets can be used to pay back a part of the outstanding debt.

Understanding Bankruptcy

Bankruptcy offers an individual or business a chance to start fresh by forgiving debts that simply can not be paid while giving creditors a chance to receive some measure of repayment based on the individual's or company's assets available for liquidation. Theoretically, the chance to file for bankruptcy benefits the overall economy by giving people and companies a second chance to receive access to credit and by providing creditors with a portion of debt repayment. Upon the successful completion of bankruptcy proceedings, the debtor is relieved of the debt obligations that were incurred before declaring bankruptcy.

All bankruptcy cases in the United States are managed via federal courts. Any decisions in federal bankruptcy cases are made by a bankruptcy judge, including whether a debtor is qualified to file and whether they should be discharged of their debts. Administration over bankruptcy cases is typically managed by a trustee, an officer appointed by the United States Trustee Program of the Department of Justice, to represent the debtor's estate in the case. There is generally very little direct contact between the debtor and the judge unless there is some opposition made in the case by a creditor.

Types of Bankruptcy Filings

Bankruptcy filings in the U.S. fall under one of several chapters of the Bankruptcy Code, consisting of Chapter 7, which involves the liquidation of assets; Chapter 11, which deals with company or individual reorganizations; and Chapter 13, which arranges for debt repayment with lowered debt covenants or particular payment plans. Bankruptcy filing expenses differ, depending on the type of bankruptcy, the complexity of the case, and other aspects.

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For more information about chapter 7 and chapter 13 bankruptcy, or how to file your bankruptcy in Orange County, contact Thomas K McKnight LLP at (800) 466 - 7507 or visit our website at TKMLLP.com for a Free Consultation. 

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