How Can You Protect Your Assets through Bankruptcy?
How Can You Protect Your Assets through Bankruptcy?
Bankruptcy laws provide asset protection for troubled businesses and individuals. The process usually begins when the debtor files a petition with the financial insolvency court. Bankruptcy petitions are usually granted fairly quickly. The petition can be filed by an individual, a couple, or a company. Filing for bankruptcy provides legal protection from creditors.
Why Lawyer?
Certain types of bankruptcies (e.g., Chapter 13 or 11) cannot be handled without an attorney. They are technically complex and not feasible without a legal background. Individuals can file Chapter 7 bankruptcy without an attorney (filing pro se). However, it is strongly recommended that you seek the advice of a qualified lawyer. He or she has long-term financial and legal obligations. For example, the attorney is needed for a complete inventory of assets and all debts. Professional lawyers at Debtstoppers will take immediate action and advise you on how to keep your property away from creditors, prevent credit card debt, repossessions, foreclosures, creditor harassment, and many other debt problems.
The U.S. Bankruptcy Code contains five ways to go through debt-stop proceedings. Their types depend on several factors, including whether you are an individual or part of a business. Of them, two are applicable for use by individuals. These are the Chapter 13 and Chapter 7 procedures, and filing is done according to the Code:
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Individuals file a petition under Chapters 7 (liquidation) and 13 (individual debt settlement)
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Corporations declare financial ruin under Chapters 7 (on liquidation) and 11 (on reorganization)
Insolvency of a Person
Basic differences between the two procedures can be easily understood with the help of attorneys-debt-stoppers. A person declared insolvent under Chapter 13 is given a deadline within which all debts must be paid, but the assets are not subject to seizure and sale to repay the debts later. Chapter 7, on the other hand, requires that a certain class of debts is paid out of the debtor's cash assets. These repayments are not intended to satisfy the claims of all debtors but only those that cannot be written off under the law.
Business Bankruptcy
A business filing for Chapter 11 bankruptcy is required to disclose all of its assets while maintaining control of them and provide a complete list of its debts. If the law court finds that there has been fraud or gross mismanagement on the part of the debtor, it may appoint a trustee to take over all management for the duration of the case. The business continues to operate as usual, but the original owner is no longer in control. If it appears that the business cannot operate profitably and meet repayment schedules, Chapter 11 converts to Chapter 7. Companies usually try to avoid this type of proceeding because it prevents them from continuing their operations.
Chapter 7
In this chapter business insolvency, the goal is not to become a financially healthier business but:
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close the company
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sell the existing assets
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satisfy creditors
Liquidation bankruptcy means that the trustee sells all non-exempt assets of the debtor to pay off the debts as much as possible. The portion of the debt that cannot be discharged in this manner is written off. The mere fact of going bankrupt is not a crime no one will go to jail. Only in the case of financial fraud will there be a criminal prosecution.
Comply with the Law
The debtor is liable for deceiving the creditor; so, he/she may lose all assets. And if the fraud is proven, it can lead to a more severe penalty jail term. If the bankrupt tries to hide his/her assets from the representative of the court, or it is revealed that he/she wants to become a fictitious bankrupt, it is a 100% guarantee that this person will end up in prison.
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