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Bankruptcy Attorney
Bankruptcy is a process under federal law that allows debtors who owe more money than they can pay to either eliminate their debts or work out a payment plan to pay a portion (or all) of their debts over time.
Bankruptcy attorneys handle all aspects of bankruptcy law and provide legal methods for an individual or commercial enterprise/business to either wipe out debts by liquidating assets and distributing them among creditors or resolve them by developing a court-approved reorganization plan, or other plan involving the repayment of creditors over time.
What does "secured" or "unsecured" debt mean?
A: Secured debt is debt that allows a creditor to make a claim on an asset (i.e. home, real property or car). Unsecured debt is held by creditors that have no claim to your assets (i.e. credit cards).
Consumer Bankruptcy -
Personal Bankruptcy is a proceeding in which a court administers the estate (the property and other assets) of a debtor for the benefit of creditors.
A debtor is a person or business who owes money to others. A debtor may choose to file a bankruptcy proceeding, and use a bankruptcy attorney or lawyer to resolve a hopeless financial situation, or to put off the collection of debts for a period of time to allow for financial reorganization.
Commercial Bankruptcy - Chapter 7 bankruptcy is sometimes also called liquidation bankruptcy. Firms experiencing this form of bankruptcy are past the stage of reorganization and must sell off any un-exempt assets to pay creditors. In chapter 7, the creditors collect their debts according to how they loaned out the money to the firm (also referred to as the "absolute priority"). A trustee is appointed, who ensures that any assets that are secured are sold and that the proceeds are paid to the specific creditors.
Commercial Bankruptcy - Chapter 11 bankruptcy can also be called rehabilitation bankruptcy. It's much more involved than chapter 7 as it allows the firm the opportunity to reorganize its debt and to try to re-emerge as a healthy organization. What this means is that the firm will contact its creditors in an attempt to change the terms on loans such as the interest rate and dollar value of payments. Like its cousin, chapter 11 requires that a trustee be appointed; however, rather than selling off all assets to pay back creditors, the trustee supervises the assets of the debtor and allows business to continue. It's important to note that debt is not absolved in chapter 11: the restructuring only changes the terms of the debt, and the firm must continue to pay it back through future earnings.
If a company is successful in chapter 11, it will typically be expected to continue operating in an efficient manner with its newly structured debt. If it is not successful, then it will file for chapter 7 and liquidate. In both instances, common shareholders will most likely see little (if any) return on their investments.
Commercial Bankruptcy -
Federal bankruptcy law is organized into "Chapters," which govern specific types of bankruptcy proceedings. A business can file for bankruptcy under either "Chapter 7 or Chapter 11. Chapter 7 or "straight bankruptcy" proceedings involve the complete liquidation of the debtor's estate. Chapter 11 or "business bankruptcy" allows business bankruptcy reorganizations.
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