Bankruptcy

"Bankruptcy is the state of bankruptcy of an organization or individual, i.e. the inability to pay debts. In the United States, bankruptcy can take one of three forms: A) Chapter 7 is an involuntary liquidation imposed by the creditor(s). Some companies are so deeply in debt that they cannot continue their business operations. They will likely be ""liquidated"" and forced to file under Chapter 7. The courts assume responsibility and management through a court-appointed trustee. Their assets are sold for cash by a court-appointed trustee. Administrative and legal expenses are paid first, and the remainder goes to creditors; b) Chapter 11 is voluntary by the debtor. Unless the court rules otherwise, the debtor remains in control of the company. The U.S. Trustee, the bankruptcy arm of the Department of Justice, will appoint one or more committees to represent the interests of creditors and shareholders in working with the company to develop a reorganization plan to eliminate debt. And the, c) Chapter 13 bankruptcy, the debtor proposes a 3-5 year repayment plan to creditors offering to repay all or part of the debts from the debtors' future income. The amount to be repaid is determined by several factors including the disposable income of the debtors. To file under this chapter, you must have a “regular source of income” and have some disposable income. As in Chapter 7, corporations and partnerships may not file under this chapter. Bankruptcy laws vary from one state to another, but most of them have the same meaning Send feedback Side panels History Saved Contribute"

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