The basic definition of bankruptcy is that it is a process that notifies banks and other similar institutions that an individual or organization will not be able to pay any more debts if loaned money. Bankruptcy can be voluntary, in the case that someone decides to declare it. It can also be involuntary in the case of businesses. If large debts are not being paid off, the creditor can attempt to force the debtor to be declared bankrupt, but only if that debtor is a business and not an individual. Either way, you will want to consult a bankruptcy attorney if you are declaring bankruptcy.
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Bankruptcy, defined as an understanding that banks should no longer lend to an individual or organization, could not exist, of course, without banks. Banks began simply as reservoirs for money, but eventually came to take on the task of issuing lines of credit and loaning out money with interest. Bankruptcy occurs when one can no longer pay debts. In the case of a corporation declaring bankruptcy, because it deals with large sums of money that are tied up in the latest techniques of financial innovation, the legal system tries to offset this disruption by allowing the corporation to continue to exist through restructuring. In the United States, this is known as a Chapter 11 bankruptcy.
In the United States, there are several different types of bankruptcy, referred to as "chapters" of bankruptcy. Chapter 7 is the basic bankruptcy that can be used by individuals or businesses. It is easier and takes less time. If you are an individual or small business owner considering bankruptcy, this is likely the form of bankruptcy that would be recommended to you. Chapter 9 is municipal bankruptcy that allows the federal government to resolve the debts of municipalities.
Chapter 11 is corporate bankruptcy that allows a corporation to continue to exist while paying off debts. Since the advent of the global financial crisis, you have probably heard the term Chapter 11 used in the news to describe the situation of certain corporations. In that case, instead of only one bankruptcy attorney, it is likely that an entire team of corporate attorneys will facilitate the complex process. A bankruptcy attorney must deal with the complex issues of a corporate bankruptcy and subsequent restructuring. In some cases, this involves a bailout if the corporation is thought of as "too big to fail". This type of attorney in the United States would either work for the federal government or the corporation to negotiate how the restructuring would take place.
Bankruptcy is a word that scares many people, because it usually involves a complete collapse of a person or business's financial situation. In general, one declares bankruptcy when one is in so much debt, that it is no longer feasible to try and pay it off, even slowly over time. This can happen for a variety of reasons, such as the failure of a business, or through the accumulation of large amounts of individual debt, such as excessive medical bills without insurance. Divorce is another reason one may consider bankruptcy, if one's spouse has accumulated joint debt without the one's knowledge or consent. Regardless of the reason, a bankruptcy attorney will guide you through the legal process of declaring bankruptcy.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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