There are a number of facts on bankruptcy. These are important for debtors because it helps them to make appropriate decisions about filing bankruptcy petitions. Facts include procedure of bankruptcy, effects of bankruptcy, and available options in bankruptcy.
Facts of Bankruptcy
There are two chapters under which the bankruptcy petitions can be filed. These are Chapter 7 and Chapter 13 of the Bankruptcy Codes of the United States. In Chapter 7 bankruptcy petitions, the petitioner’s property is liquidated and the creditors are paid. The Chapter 13 bankruptcy petitions are for extra time to pay off the debts. These petitions need to be supported with a repayment plan. Chapters 11 is also used for the purpose of bankruptcy petition filing.
The Bankruptcy Courts and Trustees
There are approximately 90 thousand bankruptcy courts throughout the United States to handle bankruptcy cases. All bankruptcy petitions along with a large number of documents are filed in these courts.
After reviewing bankruptcy papers, courts appoint trustees to manage the bankruptcy process and to take possession of the bankrupt’s property when necessary. Trustees liquidate the property and pay the creditors.
An important fact on bankruptcy, is the sudden change in the financial condition once the bankruptcy orders are passed. According to Chapter 7, most of the assets of the petitioner are possessed by the trustee. The availability of financial assistance for an individual becomes very limited. If assistance is available, the interest rates charged are abnormally high.
The bankrupts are subjected to a number of restrictions such as credit affordability and employment. These individuals need to have permission from the court to start a new business. Bankrupts are not considered for a number of positions in the public and corporate sector.
Last Updated on : 10th July 2013