If someone asked you what Abraham Lincoln, Walt Disney and Milton Hershey all had in common, you probably wouldn’t expect to hear that each of them declared bankruptcy before making it big. All to often people regard bankruptcy as a sign of failure and ruin, but this couldn’t be far from the truth. Rather, it is a legal way for people with promise to start over again with a fresh slate, and to allow them to walk away from their past while being all the wiser to proceed into the future.
Types of bankruptcy to file
There are three main types of bankruptcy to file depending on the unique needs of the individual(s). These include Chapter 7, Chapter 11 and Chapter 12.
Chapter 7 is what most people think of when they entertain the option of filing for bankruptcy. This is when the trustee sells off non-exempt assets belonging to the debtor so that debts can be repaid to the fullest max possible. Then the portion of the debt that can’t be repaid is discharged. However, only individuals can take advantage of the discharge, and not corporations or business partners. Furthermore, once a business files this type of bankruptcy, it is impossible for their business to continue to run.
Chapter 11 is for corporations or small businesses, and is generally very tricky to navigate. Filing this type allows the business to continue to run and provide a service to clients while maintaining ownership of the operations and assets while negotiating a plan to pay creditors. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005demands a 120-day time limit to come up with a recognized payment plan. If the business owner fails to submit a plan, the creditor may then submit one.
Chapter 12 is solely meant for farm owners. It is very similar to chapter 11 in that the debtor still owns and controls his assets and works out a payment plan. With a Chapter 12 the debtor can generally work out a 3-5 year payment plan, and some portion of the debt may be discharged depending on the farmer’s income. Weather is a huge factor for destroying crops and slowing down cycles—results that can financially strain and even devastate a farmer. Therefore, having some added leniency in the Chapter 12 that lacks in the corporate and traditional business option of Chapter 11 is a great breather.
Finding the right lawyer
When looking for a good bankruptcy lawyer in LA, there are many things you will want to include in your arsenal of criteria. For example, when searching online make sure the firm advertises as a bankruptcy specialist. Be sure to study the firm’s website to find out where the lawyer(s) went to school, how long they have been practicing within the field of bankruptcy law, and what the size of their staff is. You must also make sure that the lawyers you are hiring are certified by the American Board of Certification. Surprisingly, not all bankruptcy attorneys are. Having a certification truly attests to the fact that the lawyer is indeed a specialist in his or her field.
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