We can consider bankruptcy as a judicial solution to a debtor’s financial situation. In other words, it is a collective execution process, in which all the bankrupt’s assets are collected for a forced judicial sale, with the proportional distribution of the asset among the creditors. This gives creditors some satisfaction from the money that was borrowed. Bankruptcy aims to protect not only the individual filing but the creditors.
Liquidate Assets
If a creditor made the petition, the process takes a little longer. Then there is an investigation and inquiry phase, collection of the assets. The last step is the liquidation of the assets and payment to the creditors, putting an end to the bankruptcy process.
Bankruptcy is itself a complicated legal process, formed by rules of different branches of law. Some argue that it cannot be restricted to the simple liquidation of the debtor’s assets. Above all, it must aim at the preservation of the company in an economic crisis, which will be subject to the fulfillment of a reorganization plan.
Chapter 11 or 13 Reorganization Plan
When you file Chapter 11 or 13, you keep all of your assets, and your business stays open. You will be court-ordered to pay back the creditors over three to five years. Your debt will be lowered in some areas such as interest and late fees, making it less burdensome to pay your debt.
Contact a Hidalgo County bankruptcy attorney to determine if bankruptcy will help you or your small business get out of overwhelming debt and get a fresh financial start.