Declaring bankruptcy may seem like a great way to prevent creditors from overwhelming you or pressuring you for repayment when you are not financially capable of paying. But it’s not an easy process at all and requires a lot of paperwork, documentation, and legal proceedings.
You may not even understand what’s going on at certain stages, and that is why you’ll need a Cincinnati bankruptcy lawyer to assist you with the entire process. And more importantly, before you seriously consider filing for bankruptcy, there are many things you should know about it.
So if you’re unable to repay your debts and planning to declare bankruptcy, here’s what you need to know:
What Exactly Is Bankruptcy?
Bankruptcy is a term we hear quite often, and it applies to both individuals and corporations. It’s the process through which a person or business declares that they are financially incapable of paying their debts. Declaring bankruptcy is an effective way to put your creditors at bay, find some relief from your debts and make a fresh start financially.
The concept behind bankruptcy is simple:
- You have large debts, but not enough income to repay them.
- You legally file for bankruptcy, and your case is reviewed.
- If the court approves your declaration of bankruptcy, you will be relieved of debts that you cannot pay and it allows you to set your finances on track once again.
Types of Bankruptcies
There are three different types of bankruptcies – Chapter 7 and Chapter 13 are applicable for individuals while Chapter 11 is for corporations.
Declaring Bankruptcy As An Individual
Any person that wants to declare themselves bankrupt must file under either Chapter 7 or 13. So what’s the difference between the two?
Chapter 7 bankruptcy requires you to pay off whatever debts you can, even if you have to sell certain assets. Under this process, the court assigns you a ‘Trustee” who will overlook the matter of selling your valuable assets and then repaying your creditors, be it fully or partly, on a priority basis. The good thing is that certain assets like your house, clothing, and essential furniture are not included under Chapter 7, so you won’t be obliged to sell those assets. After the process is completed, you will be completely pardoned of all debts.
Chapter 13 bankruptcy doesn’t pardon your debts, but reorganizes them and gives you time to repay. In this process, none of your properties and assets need to be sold. Instead, your debts will be organized into small monthly payments which must be paid through the Trustee.
Filing Bankruptcy As An Organisation
Filing Bankruptcy works differently for an organization.
Chapter 11 bankruptcy is meant for businesses and organizations, and filing for this type of bankruptcy allows the business to restructure all its debts and also buy more time to make repayments. However, the process of analyzing all financial aspects of an organization and verifying the bankruptcy claims is going to be very complicated. That’s why filing for Chapter 11 bankruptcy is very complex as well as an expensive process.
How To File For Bankruptcy?
To start the process of filing for bankruptcy, you can schedule a visit to the court where you can find the different bankruptcy forms under Chapters 7, 11, and 13. After that, you must brace yourself for a long process which includes lots of documentation and paperwork, mainly to review your complete financial situation. And even after all that hard work, the court may decide that you are not eligible for bankruptcy.
If you’re filing for bankruptcy all on your own, such a scenario is likely to happen, which is why the proper procedure would be to first consult a bankruptcy lawyer.
On your first consultation, your lawyer will mainly explain what happens when you declare bankruptcy and how it will affect your finances. If there are any risks or complications involved, you will be informed about them as well. Declaring bankruptcy is a serious and extremely important decision so you must consult a lawyer first to be sure that it’s the necessary course of action for you.
After the consultation, if you’re certain that you want to move ahead with the process, your lawyer will handle the legal procedures on your behalf. It makes things easier as you merely need to follow their instructions and provide all necessary documents from your end. Even your bankruptcy petition will be drafted and submitted by your lawyer.
Contact a Cincinnati Bankruptcy Lawyer
Declaring bankruptcy can be a crucial decision for individuals and organizations if they are truly incapable of repaying their debts. But consider the complexity of the process with extensive analysis and documentation of your finances, it’s only wise that you get in touch with an experienced bankruptcy lawyer. They can help you decide if filing for bankruptcy is really the proper choice for you, and take care of all the legal procedures on your behalf.
To get more help on declaring bankruptcy, contact us today.